What’s inside:
- The DAX finds bids, gets help from NFP
- Currently trading at strong resistance, viewed as potential spot for would-be shorts
- A break above could change daily chart structure, but until then still viewing DAX through bearish lens
On Friday, the DAX experienced good buying pressure from the start of the day session on through to the close. The much larger than expected U.S. NFP headline figure (+287k vs. 180k expected) helped propel European indices into the close of the week, with the DAX closing nearly 1% higher for the day than where it was prior to the release of the jobs report.
We were looking at a developing channel on the hourly, with trend-line support in focus off the 6/24 ‘Brexit’ day low as keeping the short-term pointed higher. But the broader daily and weekly charts, despite the short-term trend support and flight higher on Friday and today, still point to a weak market.
The DAX is currently attacking a familiar area of resistance between ~9730 and 9820. To be exact, the last bounce turned lower on July 4 at 9812. Traders looking to establish a short with a backstop in place could look to enter on a turn lower from here and place a stop above the July 4 high.
If a break above resistance takes hold then the bearish price structure of lower lows and lower highs would come under fire with the possibility of a higher low already developing. But until we see a strong push above resistance we continue to view the DAX through a skeptical lens.
DAX 2-hour [Daily]
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX. Paul can be reached by email at probinson@fxcm.com.