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DAX 30, CAC 40 Trading Off Towards Test of 200-day MAs

DAX 30/CAC 40 Technical Highlights

  • DAX 30 breaks hard, 200-day test could be nearing
  • Megaphone pattern in process of triggering
  • CAC 40 only a stone’s throw away from the 200

DAX 30 breaks hard, 200-day test could be nearing

The last time I was discussing the DAX, it was holding steady in record territory and looking like it could try and make another run. But just like that the 13600 level was broken, and then coronavirus fears took a sharp turn for the worse.

Monday’s gap-down was a huge, accounting for most of the day’s losses. Closing down 4% from near a record high is an unusual event to be certain. With the trend-line from August broken, we are seeing the Megaphone pattern dating back to November about to get triggered. These formations highlight growing uncertainty in the market that eventually gets resolved with a directional move.

It’s a pattern that was on the radar, but until we saw price action corroborate its bearish implications, it wasn’t really worth discussing. That has of course changed now. With 12886 as the final level of support in the price sequence, we could soon see an even larger slide develop in the days/weeks ahead.

The 200-day MA currently sits at 12635, in confluence with the July high. This is a spot to look for a reaction at. We may see a bounce before then, and if the DAX can get above 13236 perhaps a run at a gap-fill. But the thinking is that this a gap that might not fill right away like so many do.

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DAX 30 Daily Chart (megaphone, 200-day not far away)

DAX 30 daily chart

DAX Chart by TradingView

CAC 40 only a stone’s throw away from the 200

The CAC 40’s turn lower already has the 200-day MA as well as price support right around 5700, and the trend-line running up from the December low. It would be reasonable to expect, even if lower prices lie ahead, that a bounce develop off this area first with all the various types of support in the vicinity.

CAC 40 Daily Chart (confluent support just below)

CAC 40 daily chart

CAC 40 Chart by TradingView

Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX