DAX Consolidates Near 6-Month Highs

If the DAX can hold current support levels before breaking to new cycle highs, it could reaffirm the strength of its bullish channel.

If the DAX can hold current support levels before breaking to new cycle highs, it could reaffirm the strength of its bullish channel.

The DAX has seen some large swings around the 200-day eMA, although a decent trend structure is emerging within a bullish channel on the daily chart. Prices are consolidating near 6-month highs after gapping above the September lows, and the consolidation has found support around the 8-day eMA and structural levels. Moreover, the 8 and 21-day eMA’s are pointing higher and fanning out to show bullish momentum is picking up.

For a more convincing momentum breakout, we’d prefer to see prices hold above immediate support and break above 12,030 to assume trend continuation. If a deeper retracement is to materialise, we’d look for the 11,750 region to hold before waiting for bullish momentum to return (as this is where the 38.2% Fibonacci retracement and lower-gap reside, making it a relatively healthy correction level).

A break below the 11,750 region puts it onto the backburner until the trend becomes clearer. Also, take note that the 200-day eMA and lower channel could provide likely support levels, which makes short trades on the daily timeframe less desirable, in terms of reward/risk potential.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account