Is Danger on the DAX’s Doorstep?

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dax pic nov 13

The DAX got off to a good start this morning but is trading flat in today’s afternoon session. It is imperative to state that the index experienced tremendous selling pressure yesterday, which saw it fall below its 100-day moving average. However, its ascendance earlier today helped it rise above the 9278 level, which is its 100-day moving average.

Support for the DAX continues to remain near the 9143 zone, while its resistance still lingers at 9342. Reports released today indicating that overall Eurozone inflation increased should ultimately be quite positive for the DAX.

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Comments from European Central Bank Chairman Mario Draghi about Quantitative Easing not being the only answer to generate support for the Eurozone economies is being taken with a pinch of salt by many analysts, who believe that the ECB will eventually have to introduce a bond-buying program in order to make sure that the European Union does not fall into a triple-dip recession.

When looking at the hourly chart, the important area to watch out for is 9143, as any breach below this zone will pull the index towards the 9000 level. The momentum indicator for the DAX is showing symptoms of an apparent reversal, which of course is a positive sign and suggests a shift from sell to buy. Lastly, although the relative strength is providing us with a buy signal, it is not offering any indication that it has any inherent strength, which some analysts consider disheartening.

Actionable Insight:

Long the DAX at current levels with a strict stop loss below 9143 for an intermediate target at 9342.

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Deepak Tiwari, a law graduate, has been working as a journalist for six years now. He currently writes on Bitcoin, economic, and Forex related news at ForexMinute, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers for readers, traders and brokers. His other specialties include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc.