DAX 30 & CAC 40 Charts: Continued Weakness Looks Likely

DAX 30 & CAC 40 Charts: Continued Weakness Looks Likely


DAX 30/CAC 40 Technical Highlights

  • DAX breaking through December trend-line
  • CAC 40 breaking neckline of H&S pattern

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DAX breaking through December trend-line

The DAX is currently trading below the trend-line from December. With a little more weakness price support around 11844 will also be broken, helping carve out a lower-low from May 13. This occurrence will be arriving after the May 16 lower-high relative to the monthly high.

This creates a situation where you have not only an important trend-line broken, but also the first true bearish price sequence in place since the low to end last year. This is seen as potentially setting the market up for a broader decline.

First up as support under 11844 is a gap-fill from April 2 at 11755, followed by the 200-day MA at 11617 which is in confluence with the lower parallel tied to the t-line running off the monthly high, another gap-fill at 11526, then the March low at 11300.

DAX Daily Chart (December t-line broken)

DAX 30 & CAC 40 Charts: Continued Weakness Looks Likely

CAC 40 breaking neckline of H&S pattern

Last week, we looked at the possibility of a head-and-shoulders pattern coming into play, and as long as a close below the neckline takes shape today then the pattern will be validated. The 200-day is nearby at 5183 but may not present much support as it stands by itself and arrives shortly after an important pattern-break.

The height of the pattern from head to neckline points to a ~350 decline from the neckline around the 5250-mark, or to around 4900. There aren’t any real significant levels of support between here and there.

CAC Daily Chart (H&S neckline breaking)

DAX 30 & CAC 40 Charts: Continued Weakness Looks Likely

Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.

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—Written by Paul Robinson, Market Analyst

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