DAX Technical Outlook: Looking to Find its Footing Ahead of ECB

dax daily price chart

DailyFX.com -

DAX Technical Highlights:

  • Strong back-and-forth gap reversals first two days of the week
  • Market may have found a low for now if Monday's gap-reversal holds
  • Tactical considerations outlined; event risk tomorrow via ECB meeting

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Monday gap-reversal may have marked near-term low

On Monday, the DAX gapped just below the support zone of 11935/868, but quickly found a large number of buyers to keep it buoyed. The gap-and-reverse held enough power to think perhaps a short-term wash-out may have occurred.

A major factor which may prove helpful for global stocks. The world's largest stock market, the U.S., may be amidst a stabilization process as it works its way back higher (although today this notion might be put to the test on last night's White House news , S&P 500 futures currently -25).

A jab lower and successful test of Monday's powerful gap could offer aggressive would-be longs a chance to jump on a retest-style entry. On a break below 11831, though, another round of selling is to be expected.

For those looking to short a rally, the first level of resistance comes in at a trend-line coming down off the record high running over top the bear-flag prior to last week's swoon . A turn down from there or on a bit more strength a turn in momentum prior to reaching 12601 (carving out a lower-high) could offer good risk/reward entries.

DAX Daily Chart

ECB on Thursday

Event risk this week comes by way of tomorrow's ECB meeting, which may bring a bout of volatility on signaling over concerns of euro strength. If the single-currency is impacted with force look for similarly forceful price action out of Euro-zone indices. You can join analyst, Martin Essex, for live coverage of the ECB announcement tomorrow at 12:30 GMT time.

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---Written by Paul Robinson, Market Analyst

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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.

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