DAX/CAC Technical Highlights:
- DAX chart isn’t encouraging looking, but holding better than the U.S.
- CAC looks about the same as the DAX, between support/resistance
DAX 40 and CAC 40 Technical Outlook: Lines & Levels to Watch
European stocks are generally looking weak, with the broader trend lower and even the more recent trend since the beginning of April not looking very healthy. However, the DAX and CAC are faring much better than the U.S. markets which are sitting very near cycle lows.
This is the positive, because with the U.S. markets accounting for over half of the world stock market cap, if they bounce then with European stocks demonstrating relative strength they should rally. But conviction for a strong rally occurring is low at this time.
The DAX continues to carve out a series of lower highs and lower lows. If this bearish sequence is to be snapped then we will need to see a rally above 14226. A break above that point will at least give the market a shot at trading higher. It may not be a rip-roaring rally, but some strength is seen as probable in that scenario.
If the DAX remains below the aforementioned resistance level, then the outlook is neutral to lower. The big level of support to watch should selling hit Europe is at 13380. A break below there would open up a path towards the March lows at 12446.
For now, in a bit of wait-and-see mode as the markets try to figure themselves out. The above mentioned levels should be helpful in shaping a trading bias, though.
DAX Daily Chart
The CAC of course looks very similar to the DAX, and on that the outlook is the same for the most part. French stocks, however, are weaker than their German counterparts, and so we could see the CAC lead on the downside if selling picks up.
On the top-side resistance clocks in at 6455, with a trend-line off the highs not too far above this threshold. On the down-side support arrives at 6086, which if broken will open the door up to the March low at 5756.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
