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DAX 30, CAC 40 – Historical Crash Difficult to Guage Anymore

DAX 30/CAC 40/ Technical Highlights

  • DAX 30 down nearly 40% in a month
  • CAC 40 free-fall has no support
  • What will arrest the decline?

What will arrest the decline in the DAX and CAC?

The free-fall in stocks has entered a point of little to no precedence, especially for developed markets. The DAX is down nearly 40% since the third week of February. With the coronavirus figures having yet peaked, it may take a market closure to arrest the decline.

As far as the technical picture is concerned, it’s a secondary thought in these times. Rarely as a technical-minded analyst do I say something of this nature. The extreme negative sentiment and panic is usually a sign that the market is nearing a bottom. But at what point is that extreme met with exhaustion in selling is becoming an almost impossible question to answer.

For those who have been short, it’s been a huge trade, one that using trailing stops for may be warranted now. For those trying to fade this move, we continue to be in dangerous territory trying to buy falling knives. Waiting for some solidification in the market continues to look like the prudent approach.

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DAX 30 Daily Chart

DAX 30 daily chart

DAX Chart by TradingView

CAC 40 is supported a little distance lower

The CAC 40 is in nearly identical shape, to no surprise. Down close to 40% since less than a month, puts the decline in uncharted territory. For now, the trading outlook is to biased towards standing aside.

CAC 40 Daily Chart

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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Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX