Although the DAX opened higher this morning, it has so far been unable to sustain at itself and forfeited most of its gains. It came under heavy selling pressure in yesterdays’ trading session as fears arose concerning new restrictions on China’s debt markets. Even though new buying interest has started to emerge at lower levels many traders are perceiving this as a dead cat bounce, as risks from the global economy persist.
Additionally, new developments in Greece have affected the equity markets, after the ruling party in the country called for snap elections yesterday. This caused the Greek index to plummet close to 10%. Furthermore, crude oil prices are still under intense pressure, causing everyone to be concerned about a lack of global growth. Investors should closely pay attention to a slew of economic reports scheduled to come out of the U.S. economy in the latter half of the day and throughout the duration of the week in order to comprehend the strength of the U.S. growth trajectory. This of course could certainly affect the DAX.
When looking at the DAX’s hourly chart, the index has fallen below its important 100-day moving average of 9932, which is now acting as resistance. On the downside, the 9784 level has emerged as important support for the index. Additionally, its momentum indicators still continue to linger in the bearish zone and its relative strength index is showing inherent strength. This is certainly a bearish indicator and is clearly pointing towards an impending downtrend.
Short the DAX at current levels for an intermediate target at 9700 with a strict stop-loss above 9935.