- DAX has more upside before resistance is met
- CAC to continue rally off 2011 trend-line
DAX HAS MORE UPSIDE BEFORE RESISTANCE IS MET
The DAX finally found buyers last week and managed to post over 3% of gains on Friday. This has more upside in focus as global equity markets continue to recover from the late-year swoon. Resistance for the DAX first clocks in at the trend-line off a swing-high formed in September.
From there lies a low from November just over the 11k-mark, which depending on the timing could be in confluence with the downtrend line. This would make for the first big test in what has been an unrelenting trend for months. From a tactical standpoint, it could make for a solid spot for shorts to establish a position with defined risk.
A break above the aforementioned resistance levels would have a retest of the 2011 trend-line soon underway. Given the broad head-and-shoulders pattern triggered during Q4, it looks unlikely a rally would be able to carry beyond the 2011 trend-line.
For now, traders with short-term time-frames (intra-day to a few days) look like they will be best served focusing on a continued bounce before possibly turning bearish at higher levels.
DAX DAILY CHART (ROOM TO GO TO RESISTANCE)
CAC TO CONTINUE RALLY OFF 2011 TREND-LINE
The CAC is coming off the 2011 trend-line and in-line with the DAX should continue to work its way higher. Similarly, to the DAX, the French index has trend-line resistance from late September to contend with along with lows from the prior to the last leg lower, near 4900. The 2011 trend-line and recent lows are considered major levels of support.
CAC DAILY CHART (BOUNCING FROM 2011 T-LINE)
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