The DAX had a very strong session yesterday post comments from the European central bank chief Mario Draghi with regards to introducing further easing and stimulus to kick-start the flagging European economy. The waning geopolitical tensions in Ukraine have also played a very important role in pushing the index higher. The dovish comments from the ECB chairman added to the bullishness and traders witnessed follow up buying. It is important to note that the DAX has been in a very strong uptrend over the last couple of week’s right from the time it hit an intraday low near 8916. Another economic report which should be a cause of concern for traders would be the fact the German confidence index has hit yearly lows which are indicative of the fact that consumers and manufacturers are being tepid about further consumption or investment activities. This is a very bearish indicator for the economy and the euro-zone as a whole. Political risks out of France would also be closely looked upon by traders and investors.
On the daily charts for DAX, the index has comfortably moved above its 20 day exponential moving average which currently stands at 9264 and should be used as a stop loss by all traders and investors currently long on the index. On the upside the next resistance for the index comes near 9594. The stochastic oscillators for the DAX is currently in the overbought zone and are showing first signs of tapering providing for a sell signal which should act as a warning signal for all bulls at the current juncture.
Traders can go long at current levels with a strict stop loss below 9264 with a primary target at 9600
Traders should short the index only if it falls below 9260 with a strict stop loss at 9520 with a target at 9000.