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At Risk of Snapping Support

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DAX/CAC Technical Highlights:

  • DAX testing trend-line support, watch for break and lower-low
  • CAC broke channel support from early in the year

The DAX is testing the October trend-line that was reaffirmed as a level of support last week when the index broke hard but quickly snapped back. Today’s selling is thus far aggressive and could get worse, likely depending on how the U.S. markets fare.

For starters, the line will be treated as support until broken. With that said, would-be shorts will likely be best served waiting for a break of the line and the most recent low on the line which falls at 14845. A decline below there is likely to set into motion a move down to the March 2020 trend-line.

For would-be longs looking at recent price action as a sideways move before a potential drive to new highs, the October trend-line offers a bit of a backstop from which to assess risk on longs. If the DAX can hold again it would add even further validation to trend-line support and keep the top-side in play.

Either way the line is important for shaping a trading outlook as we roll through the rest of the week and beyond.

DAX Daily Chart (sitting on trend-line support)

dax daily chart

DAX Chart by TradingView

The CAC 40 is breaking through the bottom-side trend-line of a channel that has been in play since early February. But so far the breach isn’t super significant and by day’s end it may very well end up only an intra-day occurrence.

For the break to be official, a daily close below the lower parallel is needed. In the event it does, then look for the 2020 high at 6111 to come into play in the days ahead. Should we see the CAC rally to close above the line today, then the channel remains intact and a new high may be around the corner soon.

CAC Daily Chart (probing below lower parallel)

cac daily chart

CAC 40 Chart by TradingView

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX



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