The DAX rose on Thursday’s session after the Federal Reserve Chair Janet Yellen signaled that there would be no interest rate hike in “a considerable time”, while Scotland expected to vote on independence today.
The German index was flat in yesterday’s trading session as traders and investors waited for the Federal Reserve statement. The Fed in its monetary policy did not surprise the street with its views on short term interest rates as it was already factored in by the market. Traders expected the European central bank to continue with its lower interest rates policy as the economic reports coming out of the Eurozone. Traders would be closely watching the flurry of economic reports coming out of US including jobless claims, Building permit etc.
Traders believe that the economic sentiment in the Eurozone has been deteriorating and signs of stagflation are clearly visible. Investors would now shift their focus to the Scottish referendum on independence as many believe if the people of Scotland vote in favor of independence, the United Kingdom and the whole of the eurozone economy might face turbulence in the near future. Also, the economic and political reports coming out of the Eurozone and Syria would keep traders on edge going forward.
The DAX on the daily charts has formed a very sound base near the 9,569 level and only a break below those levels would make traders think of a reversal from the current uptrend. Many believe that the price action in the current environment is nothing but a consolidation phase. The momentum indicators for the DAX are in bullish territory and are showing little or no signs of a reversal. The only cause for concern for traders would be the fact that the positive price action has been on low volumes.
Short DAX only if breaks below 9,569 for a short term target at 9,376 with a strict stop loss at 9,790.