DAX/CAC Technical Highlights:
- DAX isn’t particularly strong, but still heading in ‘right’ direction
- CAC is grinding higher, but wouldn’t take much to set it back
DAX and CAC Technical Outlook: Wobbly but Not Bearish
The DAX has been heading higher in a grinding fashion lately, with a little bit of a set-back today. Overall, the rise since trading around the 200-day has been fairly persistent, but lacking a ton of conviction. Not long ago we discussed in a video the possibility that this rally could mark the right shoulder of a big picture head-and-shoulders pattern. But without a true turn lower this is only a possible scenario and not what is right in front of us.
What is right in front of us is a market that is still holding steady, even if it doesn’t make us want to run out and buy stocks hand over fist. For now, the game-plan is to continue to respect the current leg higher until there is firm evidence that we shouldn’t.
On the top-side a fresh short-term higher-high will be created on a rise above 15781. This will get the ball rolling towards the record high around the 16k mark. If we see a drop below 15406, the most recent short-term swing-low, then next up will be another test of the 200-day at 151609 (and rising). At that time we could start to entertain the notion of a head-and-shoulders.
DAX Daily Chart
The CAC has been rising a bit more persistently as it climbs back towards the August high that is very near the record high of 6944, created in 2000. At this time that looks like a real possibility we see a fresh high created, but like with the DAX confidence isn’t super high.
High enough, though, that we should continue respecting the rally. A hard breakdown below 6636 is needed to really start to bring in the possibility of a reversal back towards the 200-day moving average.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
