DAX/CAC Technical Highlights:
- DAX stalling ahead of big breakdown level last month
- CAC turning down from a level of resistance for now
DAX 40 and CAC 40 Technical Forecast for the Days Ahead
The dramatic drop and recovery is coming to a slow down as DAX momentum has waned in recent sessions. Not to be unexpected given how much movement we have seen since late February. It’s unclear at this point if the DAX has some further legs up to a test of the big breakdown level just over 14800.
That level marks the bottom of a broadening wedge topping pattern, that from a measured move perspective, reached its fully potential on the Russian invasion. For now, we may see some backing and filling before another attempt to push higher.
If the recent low at 14109 doesn’t hold, look for the March 16 gap to get fille down to 13916. This gap may fill first before seeing any additional strength. However, if the DAX can continue to move sideways without dipping any further, then a base could be built for fresh longs to enter above 14553. A breakout above there would bring into play the possibility of testing important resistance around 14800.
For now, in wait-and-see mode until better clarity presents itself. Soon we should have a better look at what the market wants to do next.
DAX Daily Chart
The CAC is coming off resistance, a run-in with the Nov 30 low at 6655. A urn down to fill the gap would require a drop 6355. Like the DAX, if the CAC can remain horizontal in movement then a base could get built for another leg higher. There is substantial resistance above around 6775, where the 200-day moving average lies along with a trio of lows created from December to February.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
