DAX/CAC Technical Highlights:
- DAX is nearing a big test with the bear market lows
- CAC 40 is only a little stronger and should soon test lows as well
- Market may see a bounce develop, but new lows anticipated
DAX and CAC 40 Technical Outlook: Already Approaching Bear Market Lows
The DAX ran aground into the trend-line off the Jan high, and while it was viewed as a potential source of resistance the perfection at which it abided by it was a little surprising. The turn down validates that trend-line as being quite significant should it get revisited down the road.
Weakness has the bear market lows exposed at this juncture, and should become a point of emphasis by the market here shortly. We may see a bounce develop from around the Mar/Jul lows around 12400. This could offer up shorts an opportunity to re-enter the market should we see strength develop.
The anticipation is that fresh bear market lows will be achieved this fall, and it is seen as a highly likelihood that those lows will be exceeded by a large margin. By how much is hard to say at this juncture, for now will keep the lows in focus and how any bounce from it may unfold.
DAX Daily Chart
The CAC is stronger than the DAX, albeit by a small margin. If the DAX tests the bear market lows then the CAC will almost certainly come close to testing them, if not outright testing them after playing catchup. In any event, the expectation is the same – fresh bear market lows are anticipated. The big level down below to watch is in the vicinity of 5790/56.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
