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DAX 30, CAC 40 Swoons May Continue Before Bouncing

DAX 30/CAC 40 Technical Highlights

  • DAX 30 may break some more before support helps out
  • CAC 40 is supported a little distance lower
  • Markets operating on high levels of emotion make levels less reliable

DAX 30 may break some more before support helps out

Markets continue to sell-off, and may be waiting for a life-line from central banks before bouncing. Perhaps this will take some more panic selling to happen before they themselves panic into adjusting monetary policy prior to their scheduled meetings this month.

That said, levels of fear are extremely high, which means technical support levels are at risk of breaking, or at the least getting overshot a bit before seeing the market firm up. The DAX broke the December 2018 trend-line on Friday, and this morning the gap up was met with selling. It’s a weak market.

Looking lower, there is a trend-line rising up from a low made in September 2011, another time the markets were freaking out. This trend-line passes under the December 2018 low, yet another time fear was running rampant. This makes this line a fairly strong one. Of lesser importance, the trend-line is in confluence with the August low of 11266. That is still a solid 600+ points lower from here.

Catching falling knives is a tough, and can be a dangerous game. Should we see support, or a breach below support quickly met by buying and subsequent sharp rebound, then we may finally see the market turn around. This could be on its own, it could be with a helping hand from monetary authorities. Hard to say just yet.

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DAX 30 Daily Chart (confluent support ~600 points below)

DAX daily chart

DAX Chart by TradingView

CAC 40 is supported a little distance lower

The CAC 40 is in no different shape than the DAX, obviously. There is support right around 5150, then the 2011 trend-line that passes under the 2016 and 2018 correction lows. This currently clocks in around 4900/5000, depending on the timing of its arrival.

CAC 40 Daily Chart (5150, 2011 trend-line 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