(Figure): Daily chart for DAX
The DAX had a weak session yesterday. The European Central Bank Chief reiterating about the sluggish pace of the Eurozone recovery was one of the biggest reasons for selling pressure to emerge for the German index. A report from a prominent investment bank spoke about the growth in Germany slowing and the Eurozone entering into a stage of a “Great Stagnation” sent stocks lower. Traders and investors would be looking at the ramification from the Chinese PMI data released in the Asian morning which came in better than expected.
Traders and investors would be closely looking at the economic reports coming out of the US economy in the latter half to understand the underlying strength of the US economy. It is a widely known fact that, if the US Fed hikes short term interest rates it would have a negative effect on equities and would especially affect the Eurozone economies which are already showing signs of stagnation. The business environment in Germany is showing no signs of a recovery which is a huge cause for concern.
On the daily charts for the DAX, the support for the index continues to remain at 9590 and the resistance for the index remains at 9900. Many believe that a move above 9879 can make the DAX retest its all time highs near the 10,050 mark. The momentum indicators for the DAX are showing first signs of a reversal as the momentum shifts towards the sell side atleast for the near term. The DAX currently trades above its important daily moving averages indicative of the strong uptrend witnessed by the index.
Short DAX at current levels for a short term target at 9590 with a stop loss at 9878
Long DAX if it closes above 9862 for an intermediate target at 10,050 with a stop loss below