DAX and CAC Technical Outlook Remains Bullish, but Caution Warranted

DAX/CAC Technical Highlights:

• DAX hanging out on highs within confines of a channel
• CAC is posting a small consolidation pattern, could pull back soon

DAX and CAC Technical Outlook Remains Bullish, but Caution Warranted

The DAX is currently treading water on the highs from August, undergoing thus far about a week-long consolidation pattern. It is shallow in depth, so it’s not the sturdiest platform to rally from, but nevertheless the trend is up and will be respected as such until we see something to give pause.

Looking on the top-side, there is a trend-line running over peaks since April. That line is currently at around 16450, but quickly rising. As long as the DAX can stay within the confines of the upward channel then this will become the next targeted objective.

However, if we see the DAX fail to hold onto the upward channel structure and break back below the August high at 16030, then we could see the market weaken a bit. This is a scenario we will revisit later should it become relevant.

DAX Daily Chart

DAX Chart by TradingView

The CAC is of course in a similar boat as the DAX, hanging out in record territory. It appears extended and at risk of a pullback, more-so than its German counterpart. The trend should continue to be respected but buttoning up risk on existing longs may be a prudent move.

If we see some weakness from here the big spot to watch is the old 2000 high at 6944. Perhaps the CAC can pullback and consolidate on that level, offering up a possible entry for would-be longs. A slice through with momentum would warrant caution on that notion.

CAC Daily Chart

CAC 40 Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX