Jump to content

DAX and CAC Technical Outlook: Big Gaps Bring Support into Play


Recommended Posts

DAX/CAC TECHNICAL HIGHLIGHTS:

  • DAX gap down has major support in focus.
  • CAC gap also has trend-line in play, but less significant.

DAX and CAC Technical Outlook: Big Gaps Bring Support into Play

DAX AND CAC TECHNICAL OUTLOOK: BIG GAPS BRING SUPPORT INTO PLAY

Global stock markets are taking it on the chin today as pandemic news hits the tape. This has two of the most important European indices testing support to end the week. The DAX is down nearly 3% into a series of support levels.

The 200-day moving average is currently at 15383 and two slopes/trend-lines are also in confluence. One line runs up from the March low and the other from a low created in November of last year. This confluent area of trend support makes the gap into it especially interesting.

This could be a significant buy the dip opportunity for would-be longs if support can hold. Seeing the big gap lower maintain and the price of the DAX closing significantly higher than the open could see a bottom get forged, at least in the near-term.

Would-be longs may want to use today’s low at 15282 as a backstop with the first upside target set at a gap-fill up to 15917.

DAX DAILY CHART

dax daily chart

DAX Chart by TradingView

The CAC is down well over 3% at the time of this writing and also gapping into trend support. It’s only one line of support so it’s not as meaningful as the DAX, but nevertheless it is support. If the German counterpart holds its more meaningful levels and rallies, then the CAC should as well.

The low of today is worthy of using as a backstop next week in the event we see the current bid off the lows hold; that levels clocks in at 6736. The first target is a gap-fill up to 7075, followed by the record high at 7181.

CAC DAILY CHART

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, 26th November 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,216
    • Total Posts
      90,791
    • Total Members
      41,324
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    GedW
    Joined 01/02/23 12:43
  • Posts

    • Look Ahead to 02/02/23: ECB, BoE; BT, SHEL, GOOGL, AAPL, AMZN earnings A day after the Fed, the European Central Bank and the Bank of England are expected to raise interest rates. Watch out for live coverage from IG’s Chris Beauchamp and Axel Rudolph. Plus, tech, telco and oil earnings dominate, with reports from BT (BT), Shell (SHEL), Infineon (IFXGn), Apple (AAPL), and Amazon (AMZN).            
    • Charting the Markets: 1 February FTSE 100, DAX 40 and Dow await US Fed decision. And gold jittery ahead of FOMC, as Brent crude and natural gas look at risk of further downside.             This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • As Andrew Bailey and co gear up for their next BoE decision, will it be enough to drive the pound higher against the dollar, or could recession worries return? Source: Bloomberg   Forex Pound sterling Bank GBP/USD Central bank United States dollar  Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 31 January 2023  What do markets expect from the Bank of England meeting? This Thursday sees the latest Bank of England (BoE) decision. Markets expect the bank to raise UK rates by 50 basis points (bps), a similar amount to the ECB. What is the context? In an interesting reversion to early 2022, when the BoE seemed to lead the way in hawkishness, this week’s crop of central bank meetings points to a Fed rate increase of just 25bps, while Threadneedle Street pushes on with another 50bps hike, as will the European Central Bank. As with most central bank meetings these days, it is the comments around the decision and the voting pattern that will be more important. A more hawkish caucus might emerge, based on the improved (or at least, less bad) economic outlook that has appeared of late. But the outlook for the second half of the year remains gloomy, at best. Markets continue to expect at least one 25bps rate cut by the end of the year, but the bank will not want to give too much credit to this argument, since it is aware that inflation remains solidly above forecasts. GBP/USD outlook Momentum in GBP/USD has stalled at the December highs of $1.24, with little sign that the price wishes to push on ahead of the BoE meeting. Clearly a more hawkish BoE would be needed, but one that is not too hawkish that it then makes markets fret about the impact on the already-tough UK economic outlook. It will be a tough balance to strike, and if markets start to worry about a deeper UK recession, then we could see GPB/USD push back towards $1.20 and the 200-day SMA. Source: ProRealTime
×
×
  • Create New...