DAX Technical Analysis & Outlook 27th August

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DAX had a spectacular day yesterday as the index break above its resistance at the 100 day moving average which is being seen as a huge positive by traders and investors. The index has been in a strong uptrend right from the time it hit an intraday low of 8901. The biggest contributors for this momentous uptrend was the waning geopolitical tensions and the speculation about the European Central Bank introducing further stimulus into the system by increasing the amount of bond purchase to support a flagging eurozone economy.

The positive sentiments have led investors to discount dismal economic reports with regards to the contracting German economy and news of business and consumer confidence to yearly lows. Traders though are still keeping a close eye on the developments in Ukraine as many believe any increase in tension might act as hurdles to this uptrend.

On the daily chart for the DAX, the index is trading in a very narrow range but has an extremely positive bias and traders who are long on the index should maintain strict stop-loss as any selling pressure can take the index lower very quickly. The momentum indicators have given a fresh buy signal and are indicative of a shift of momentum towards the buy side. It is important to know that the index is currently trading at the upper end of the trading range and traders should thus remain cautious. The flagging volumes should also act as a warning signal for traders as any positive price action on the back of low volumes is considered to be the first reversal signal.

Actionable Insight:

Long DAX only if it crosses above 9585 with a target at 9700 with a stop loss at 9400

Short DAX if it falls below 9400 with a stop loss at 9572 with a target at 9200

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Deepak Tiwari, a law graduate, has been working as a journalist for six years now. He currently writes on Bitcoin, economic, and Forex related news at ForexMinute, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers for readers, traders and brokers. His other specialties include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc.