What’s inside:

  • DAX finally takes out significant resistance surrounding 12300
  • CAC 40 crosses over channel line running off May peak
  • Both have room to run with risk appetite firm and impact of euro diminishing

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In recent posts, we’ve been discussing thepositioning of the DAX, and how as long as it remained beneath the area surrounding 12300 the bias would remain neutral to bearish. The area of tough resistance had turned the market lower on several occasions over the course of about six weeks up until yesterday. The pop through was a convincing one. We’ll do now what we typically do, view that once staunch area of resistance as an area of support should we see a revisit. If the market makes a clean break back below then our newly minted bullish bias will have to be put back on the shelf.

From here the next eyed level of resistance comes in around 12676, or the swing-high carved out during the middle-part of July. If global risk appetite continues to remain firm and perhaps we see the euro weaken materially (although it’s having a diminishing impact in general) we may not have to wait long for a visit of the record high near 13k.

DAX: Daily

DAX & CAC 40 Crossed Important Thresholds, Room to Run

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Since the conclusion of the French elections the CAC 40 began trending lower, with the euphoria of a Macron victory quickly giving way to the rising euro. The selling since May was rather orderly, developing a well-defined channel (or bull-flag). The low carved out at the end of August came on a retest of the trend-line running down off the 2000 peak over the 2007 and 2015 highs. A good spot to find a bottom. Yesterday, we finally saw a break above the top-side parallel of the channel, and like the DAX it was a convincing breakout.

Looking higher, there are certainly levels along the way for the market to contend with, but if we are seeing a broader shift to the top-side then these minor levels of resistance shouldn’t be deal-breakers. The first level comes in at 5231, followed by 5259 in the near-term (Other levels noted on the chart.)

CAC 40: Daily

DAX & CAC 40 Crossed Important Thresholds, Room to Run

---Written by Paul Robinson, Market Analyst

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Source https://www.dailyfx.com/forex/technical/home/analysis/ger30/2017/09/12/DAX-CAC-40-Crossed-Important-Thresholds-Room-to-Run-PRtech.html?DFXfeeds=forex:technical:home:analysis:ger30



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