DAX Chart Set Up for Breakout, CAC Has Eyes for 2000 Record Highs
DAX/CAC Technical Highlights:
DAX Chart Set Up to Breakout, CAC Maintaining Persistent Bid
The DAX appears poised to trade to a new record high soon, with it pressing up against the highs created in June and July. The sideways price action the past couple of months bodes well in the context of a bull market.
A breakout above 15810 will have the DAX notching a new record high, but it is unclear with no signposts available as to how high the index could rise without finding sellers. It would seem reasonable to think the next leg up could be ~3-5%, but we will see.
If we get a breakout, watching how price action unfolds will be the key. Take the CAC, for example, it has yet to show signs of weakening. If the DAX can maintain a steady to aggressive rise then it wouldn’t be until we saw some type of volatility hit that we would then be looking for a pullback.
Should the DAX fail to get a further bid here into new highs and instead a pullback starts to develop, watch the March 2020 trend-line not far below. This is a significant trend threshold that was tested last month and held well. Stay above that line and the outlook is neutral to bullish.
DAX Daily Chart
The CAC has been extremely persistent since bottoming in July, notching only two down days in thirteen days and counting. Impressive indeed. This leaves the index only about 150 points from reaching the 2000 peak.
As the index continues to approach a major milestone, keep an eye out for bearish price action that might suggest the market is about to go into retreat mode. There is an upper parallel tied off with the record high, but not nearly as influential as the high itself.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.