DAX 30 & CAC 40 Forecast:
- The DAX 30[1] has run up to resistance after Brexit optimism helped to bolster European stocks
- Similarly, the CAC 40[2] surged to its highest level since December 2007
- Regardless, IG Client Sentiment Data[3] reveals retail traders have increased their short exposure significantly, signaling the rallies may continue
DAX 30 & CAC 40 Technical Forecast: Short Exposure Explodes as Indices Rise
A series of fundamental factors have bolstered the standing of the DAX 30 and CAC 40, which have subsequently pushed through various levels of resistance. As the Brexit saga continues to unfold[4], the two indices could look to extend their runs higher, but subsequent resistance stands in their way and retail traders are convinced the rally is overdone. With that in mind, the contrarian nature of retail trader data could suggest trend continuation is in store.
DAX 30 Technical Forecast
That said, resistance to the topside will be of critical importance in the event of sustained bullishness. The immediate hurdle – albeit somewhat minor – resides around 12,700. But more importantly, however, a confluence of resistance marked by the ascending trendline from December and horizontal resistance from July 2018 will look to stall an extension above 12800. Should the two levels be surmounted, the next notable area of resistance may rest at 13200.
DAX 30 Price Chart: Daily Time Frame (January 2018 – October 2018) (Chart 1)
If, on the other hand, retail traders are correct in their assumption that the DAX 30 is overbought, technical support at the 12460 and 12210 levels will look to buoy the German Index before the 200-day moving average can assist around 12050.
Retail trader data shows 27.99% of traders
