Spread betting technical analysis - DAX and EUR/GBP in focus


Post Brexit the DAX has managed to recover 650 points from the swing low on the 24th of June. However unlike the FTSE 100, it has not managed to recover the full drop. At present the DAX faces a confluence of resistance, looking at the chart we can see that the 9816 and 9635 levels coincide with two corresponding Fibonacci levels. The 9816 is the 50% of the entire Brexit move and the 9835 level corresponds with the 38.2% of the entire move from February’s lows, this band of potential resistance is also highlighted by the series of swing lows that occurred whilst the market was ranging as highlighted by the arrows. Moreover to add to the bearish stance of current levels the 21 day simple moving average comes in at 9821, only 10 points higher than today’s swing high. Interestingly today’s price activity has been rather subdued in and around these levels, this could be mainly because the US markets are closed due to a public holiday, the current doji highlights this lack of activity.


Should this resistance zone prove to be true and bearish momentum continue support may come in at 9470 which is the 23.61% retracement of the Brexit move which coincides with previous lows, should this not hold there could be the possibility to see a test of the swing lows of 9162.

However should the current band of resistance be breached then the next resistance zone comes in around 9970/10162. 9970 as is the 61.8% Fib level and the 76.4% respectively.


Looking at the 4-hour chart of EURGBP we are currently in a period of consolidation after the accelerated move to the upside. The recent high of 0.8406 tested levels not seen since March 2014 hence the recent zone of short term resistance. Interestingly the most recent bar swing low coincides with the set of swing highs at the 0.8350 highlighting its short term support for this consolidation phase. However this recent up move may be coming to an end as highlighted by the recent bearish divergence in the RSI, which is suggesting the strength of the move may be faltering. 



What is also interesting is that looking at the weekly chart we have just broken a 5-year down trend. While this break is still premature, it is certainly worth noting. After such a move it can be expected to see a period of consolidation, especially in the understanding of breaking an 5 year down trend line. In addition to highlight this short term resistance on the daily chart we are currently trading at the upper line of the trend channel. Should the market pull back from these levels support could be found at 0.8110.

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