- DAX range-bound for now, predicting the break is a futile exercise
- Daily close above 12705 clears path towards record high
- A breakdown will quickly find support via a trend-line and strong horizontal support
Find out what’s driving the DAX in our market forecasts.
Since discussing the DAX last week, it has made very little progress for either side of the tape – range-bound price action has dominated since the May 17 sell-off sparked by political turmoil hitting the U.S. The question is whether the index is stabilizing for another push towards record highs, or preparing for another leg lower. Attempting to predict which way at this time looks like a futile exercise.
The level on the top-side we’ve been focused on is 12660, and while the DAX has crossed above it on a couple of occasions on an intra-day basis, it has failed to close above – which is the key. A daily closing bar above 12660 and the most recent swing-high at 12704 should go a long way towards skewing the short-term path of least resistance back in line with the longer-term trend. The next logical target on an upward range-break is the prior high at 12842, then beyond there the February top-side trend-line could come into play close to 12900.
With a bottom-side break below 12490 it won’t be long before support arrives by way of the December trend-line, and more importantly just below there lies the old record high level from 2015 and peak in March just a few points shy of that level – 12390/75. At that juncture, as long as the DAX can pique buying interest it may offer a good spot from a risk/reward perspective to join the trend higher.
For the time-being, we’ll remain neutral until we see a range-break take shape and provide better directional indications.
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—Written by Paul Robinson, Market Analyst
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