DAX 30/CAC 40 Technical Highlights
- DAX edging higher, trading around big-picture resistance
- CAC has a sharp channel keeping price pointed higher (for now)
DAX edging higher, trading around big-picture resistance
Allowing for a little latitude on how you define the neckline of the 2017/2018 head-and-shoulders pattern, the DAX is currently trading around it. If the pattern is to play out to its full potential, then the market should begin turning down very soon. The March low from last year is also in rough confluence. This period right now may turn out to be crucial when we look back at it sometime later on.
The DAX is currently above the 2011 trend-line it broke in December, but given the larger topping pattern remains intact, it’s not viewed a strongly bullish recapture of broken trend support. A material push above the neckline of the H&S formation, though, will, and at that juncture the market may want to rise a significant way higher.
At the immediate moment, price action is a bit troubling for either side of the tape as it becomes extended over the past few weeks. Not an ideal spot to initiate fresh longs with a pullback at the least being the near-term risk, however; without any meaningful bearish price action shorting isn’t particularly appealing just yet. A little more time will tell if indeed we are at an important cross-road.
DAX Daily Chart (Big-picture resistance)
DAX Weekly Chart (H&S Top Still Intact)
CAC has a sharp channel keeping price pointed higher (for now)
Since the low the CAC has risen in a very uniform fashion within the confines of a slender bullish channel. It continues to act as a solid guide for both sides of the tape – stay within and the outlook remains bullish, break outside and weakness becomes the risk. The next line of resistance doesn’t arrive until near 5400 where a trend-line off the May high lies. Keep an eye on the DAX and the relative performance of the CAC, the latter has been strong but a turn down in Germany will mean weakness of some sort in France.
CAC Daily Chart (Channel acting as guide)
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—Written by Paul Robinson, Market Analyst
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