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DAX/CAC Technical Highlights:
- DAX trading around the 200-day MA, at risk of breaking down as US stocks look weak
- CAC doesn’t have any significant technical threats but will of course go the way of the DAX
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DAX and CAC 40 Technical Outlook: At Risk of a Decline
The DAX outlook is quickly turning towards seeing a decline unfold as it has become extended around the 200-day MA and US stocks continue to look vulnerable to continuing the bear market. While Europe may hold up better it will be virtually impossible for it to escape the gravity of the US stock market.
Taking it one step at a time, the 200-day MA alone can present unique challenges for a market. This visitation is the first since January and is seen as likely at the least inducing a pullback, if not worse if the broader global market takes a sharp turn down here.
If the pullback scenario sis what is in play here, then we may see the DAX only decline a few hundred points before we find sponsorship again. There aren’t any highly significant levels to speak of at the moment, so this one may need to find some levels as we go.
If the broader bear market is to take hold again, then the DAX will participate in some way, and it would be unsurprising to see it get hit back towards the lows of September at some point in the relatively near future.
If the DAX can maintain up here and it turns out that the 200 is only a bump in the road, then the next level of sizable resistance clocks in at the summer highs at 13947. Given the general bear market bias that is in place this level could be highly meaningful if seen.
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DAX Daily Chart
The CAC currently sits between the 200-day MA and the summer high, but if the DAX declines then this will follow suit in some manner. The first level of support to watch would be the 200-day at 6328 (& declining). On the top-side if the market can continue to trade higher then the 6608 level, the summer high, will come into focus as a highly significant point of resistance.
CAC Daily Chart
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—Written by Paul Robinson, Market Analyst
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