The DAX had a very volatile session yesterday post the release of the ZEW economic sentiment index. The reading showed that the business climate in the German economy remained characterized by uncertainty and business confidence remained relatively lower. Many traders point out towards the economic sanctions on Russia as one of the major factors for the current stagnant state of affairs.
Russia is one of the largest trading partners for Germany and the economic sanctions have led to this business relationship becoming sour and hitting a hurdle in the near term which is being seen as a huge negative. Also, Russia supplies gas and oil to the Eurozone economies and the sanctions have forced Russia to hike prices which has hurt the energy requirements of German businesses.
Traders and investors would be closely watching the release of the Fed minutes in the latter half of the trading day to understand if the Federal Reserve would hike short term interest rates in the near future. Any hawkish tone would be negative news for equities and we might see the DAX heading lower on the back of such tone. However, earlier today reports from China pointed that the government willing to inject more than 500 billion Yen (81 billion dollar) to five state owned banks in order to stimulus the economy.
On the daily charts, DAX shows strong volatility. The index opened lower, kept heading lower post the release of the ZEW Economic sentiment index but found support at lower levels and was able to close the day in flat territory which is being seen as a huge positive for the index. The support for the index continues to remain at 9,567 which is also the 100 day moving average for the index. The momentum indicators for the index are currently in the positive territory which is being seen as a huge positive.
Short DAX below 9,567 for a target of 9,380 in the near term.