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DAX: Trend, Consolidation Suggest Higher (Eventually)
DailyFX.com -
What’s inside:
DAX base-building continues
Trend and consolidation point to eventual break higher, but…
We need to wait for a confirmed breakout, breakdown levels also identified
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Is the DAX gearing up for another move higher soon? The prevailing trend and period of base-building suggest the answer is – yes. Tuesday’s break lower and reversal helped further the bullish bias with a clear rejection coming ahead of key support just above 11400. The timing of an extended move higher? Hard to say, but the consolidation is three weeks old and becoming ripe for a breakout at some point soon. Perhaps that is just wishful thinking for movement and the market ignores our ‘wishes’, continuing to chop for a few more weeks.
In any event, we’ll be ready should we get the breakout we’re looking for. The range is a little rough around the edges, with the pop higher on 1/11 having a smallish rejection tail on a failure to hold above the August 2015 swing high, and the earlier week dip and recovery forming a legitimate tail on the daily candle. Eliminating those couple of days, the range becomes a bit clearer; we’ll call it 10520 to 11650, so about 130 points.
A strong close above 11650 and preferably also the 1/11 high at 11692 which will take out the 11670 8/’15 level as well, should get the DAX moving towards a visit of other top-side levels carved out during its decline in 2015 off of record highs. We’re looking at 11802, then 11920 with some fairly aggressive buying.
What will flip the script upside down? If the market closes firmly below 11520, then takes out the 11400 line (the low of the end of December range). At that juncture, we will look to the top-side trend-line (
At the immediate moment, though, we’ll take it slow until we get a confirmed break one way or another. DAX: Daily Created with Tradingview See our Webinar Calendaror a schedule of upcoming live events with DailyFX analysts. ---Written by Paul Robinson, Market Analyst You can receive Paul’s analysis directly via email by signing up here. You can follow Paul on Twitter at @PaulRobinonFX. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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