The DAX got off to a good start earlier in the morning and is now building on its gains as we start the early afternoon session. It scaled its resistance zone of 9320, clearly displaying buying momentum. European stocks in general were higher this morning thanks to comments from Mario Draghi, who stated that the European Central Bank will do whatever it takes to support the E.U.’s floundering economy. Additionally, the German ZEW Economic Sentiment rose to 11.0, beating expectations of a mere 0.9, certainly contributed to the DAX’s ascendance into positive territory.
Many analysts strongly believe that the ECB will introduce its own version of Quantitative Easing as early as December 14th. As many know, loose monetary policy is considered to be exceptionally beneficial for equities. Traders should additionally focus upon the upcoming release of the FOMC Minutes scheduled for the latter half of the day, which should provide some insight into future policy stances that will be employed by the Federal Reserve regarding U.S. interest rates.
When looking at the hourly chart for the DAX, the index is currently trading comfortably above its resistance zone of 9320 and its 100-day moving average, which is of course a positive sign. Its momentum indicator is providing us with a buy signal, indicative of a shift in momentum towards the buy side. Lastly the DAX’s relative strength index is trending higher and is giving a buy sign, which should greatly benefit the index going forward.
Long the DAX at current levels for an intermediate target at 9550, with a strict stop-loss below 9320.