DAX/CAC Technical Highlights:
DAX and CAC Technical Outlook: Big Gaps Bring Support into Play
Global stock markets are taking it on the chin today as pandemic news hits the tape. This has two of the most important European indices testing support to end the week. The DAX is down nearly 3% into a series of support levels.
The 200-day moving average is currently at 15383 and two slopes/trend-lines are also in confluence. One line runs up from the March low and the other from a low created in November of last year. This confluent area of trend support makes the gap into it especially interesting.
This could be a significant buy the dip opportunity for would-be longs if support can hold. Seeing the big gap lower maintain and the price of the DAX closing significantly higher than the open could see a bottom get forged, at least in the near-term.
Would-be longs may want to use today’s low at 15282 as a backstop with the first upside target set at a gap-fill up to 15917.
DAX Daily Chart
The CAC is down well over 3% at the time of this writing and also gapping into trend support. It’s only one line of support so it’s not as meaningful as the DAX, but nevertheless it is support. If the German counterpart holds its more meaningful levels and rallies, then the CAC should as well.
The low of today is worthy of using as a backstop next week in the event we see the current bid off the lows hold; that levels clocks in at 6736. The first target is a gap-fill up to 7075, followed by the record high at 7181.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
