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DAX Technical Highlights:
- DAX support break leads to other important lines/levels
- Feb 2016 trend-line and April 5 gap-fill come into view
- Big-picture head-and-shoulders becoming increasingly likely
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Coming into the week, we noted that if the Thursday break of support in the 12600/500 region was not quickly recaptured, look for further weakness. Yesterday's 2.4% decline in the DAX has the aforementioned area in the rear-view mirror as support, and on any counter-trend trade higher it will be viewed as a material barrier of resistance.
The move down off the monthly high has been swift, and while it may be overdone in the very short-term, there is still more room to go before new support levels are met. There are two lines/levels in focus: the February 2016 trend-line and the April 5 gap-fill at 11958.
Tactically speaking, minor bounces are viewed as selling opportunities until meaningful support is met, however; establishing a fresh swing short at this juncture doesn't hold appealing risk/reward, so set-ups from here should be of shorter-term durations (i.e. watching the hourly time-frame for stalling rallies).
The big-picture head-and-shoulders we have been discussing recently with each push lower is working its way closer and closer towards becoming a reality. It will require a break of the previously mentioned support levels and the neckline down near 11600 before we can put it into play. If the S&P 500 fails the test discussed in today's webinar, a threat of breaking the neckline may be in the not-too-distant future.
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DAX Daily Chart (Looking to lower levels)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
