The DAX opened higher but was unable to sustain itself earlier this morning. The index which has been in a strong uptrend is now displaying its first sign of exhaustion, but there is buying interest at lower levels.
Economic reports coming out of the German economy have been a little troubling over the last couple of days. Added to this, an apparent slowdown in China has many analysts concerned about future growth prospects in the German economy. Furthermore, falling crude oil prices and weak inflation growth are causing analysts to assume that Germany’s economy is heading towards entering a deflation in the near term.
All investors should closely follow today’s European Central Bank meeting scheduled to commence shortly. Many experts feel that the ECB is likely to keep the rates unchanged. Traders should additionally tune in to tomorrow’s Non-Farm Payroll report on Friday to understand the underlying strength of the US labour markets. These events will almost certainly have an impact on the DAX.
When looking at the hourly chart for the DAX, the index is in a strong uptrend but is starting to show its first sign of a reversing. It is currently trading flat due to traders anxiously awaiting the ECB’s decision. Its momentum indicators, along with its relative strength index are implying that a reversal is imminent, which is because of a build-up of selling pressure at current levels. As of now, the DAX is still trading above its important daily moving average.
Short the DAX at current levels for an intermediate target at 9897.