The DAX is in the midst of continuing its upward trend from yesterday, along with most of the other European markets. The strength displayed by the Asian equities markets are clearly making their mark on the European trading session, as investors continue to terminate their bond transactions, and instead flock towards equities.
However, most analysts feel that investors should be cautious, insisting that the German economy is not completely out of the woods and this might just be a bear market rally, which may trap unsuspecting bulls. Economists are shifting their focus towards the upcoming FOMC Statement, scheduled for release at 19:00 GMT, which will provide some perspective regarding the Federal Reserve’s next policy stance. Most analysts expect the Fed’s Quantitative Easing program to come to a conclusion at the end of the month and are eagerly anticipating when interest rates will rise.
When looking at the hourly chart for DAX, the index is presently in a strong upwards trend, with it surpassing its daily moving average, which is an inherently bullish sign. Meanwhile, the momentum indicator for the DAX is currently positioned in bullish territory and is showing no sign of a reversal, which clearly indicates strong buying interest, available at the current level. Furthermore, the relative strength index is forming a higher-high, which is a positive indicator. Lastly, the next level of strong support for the DAX is located the psychological level of 9000.
Long the DAX if it moves above 9143 for a short-term target at 9320, with a stop loss below 9075
Short the DAX it moves below 9075 for an intermediate target at 8955, with a stop loss above 9143