The DAX continues to slowly turn higher after last Monday’s test of old resistance turned support. The confluence of previous peaks from April through June and trend-line are proving to be rather significant, leaving traders with a fairly clean line in the sand. Hold above the 8/22 low at 10386 and the bias is bullish, close below and a further retracement or worse becomes the risk.

Continued trade higher from the late June low will bring the 8/15 swing high into play, then a December swing high near 10900 and upper parallel of the trend-line running higher off the Feb lows (~11000).

DAX Daily

(Click on image to enlarge)

The biggest risk in the very near-term appears not to be sellers stepping in and bullying the market lower, but rather a lack of good movement as we work our way through the remainder of the dog days of summer. With that in mind, there is a good chance trading will be choppy. Keeping trade size small and very selective is a prudent approach until market participants file back in from late summer vacation time.