The Dax had a volatile session yesterday after the German index opened lower on the back of the strong sell-off seen in the Asian region. Traders and investors were closely watching the German inflation data that showed that inflation in the Europe’s’ biggest economy remained steady.
Investors though are concerned about the rate of growth in the German economy as all economic reports coming out of the Eurozone are pointing towards a slowdown. Traders and investors would be closely watching the manufacturing data coming out of China, as both economies are considered to share a close relationship with regards to the export commitments between the two nations.
Traders and investors would shift focus to three big economic indicators in the coming few days. The Eurozone inflation data would be closely watched to see if the ECB could cut interest rates further. The ECB meeting on Thursday would be closely watched to understand if the Central bank takes further actions to kick start a stagnating economy. Then, on Friday, traders would shift focus to the non-farm payroll data to understand the underlying strength in the US economy.
On the daily charts for DAX, the index has fallen below the all important support zone at 9592 and also its 100 day moving average currently at 9577. The strong bullish momentum witnessed over the past few weeks seems to be waning and the momentum indicator for the DAX is showing first signs of an impending sell off. The relative strength index too, has given a fresh sell signal indicative of the shift of momentum towards the sell side.
Short DAX at current levels with a stop loss at 9592 with a short term target at 9376
Long DAX if it closes above 9592 with a short term target at 9800.