The DAX is experiencing considerable selling pressure so far during today’s trading session, with the index forfeiting almost all of its gains from yesterday. It is currently displaying no signs indicating any sort of reversal, which is a bearish indicator. The sell-off was due to the release of the FOMC Statement, which stated that the Fed will conclude its bond buying and bring an end to its Quantitative Easing program.
German unemployment numbers subsided substantially this morning, indicating economic improvement, something that should have boosted the DAX. However, even that was unable to reverse its course. Analysts are now hoping that the ECB soon introduces its forthcoming asset purchase program earlier than expected in order to support a teetering German economy, but certain political uncertainties must be solved before such a program is put into place.
When looking at the hourly chart for the DAX, the index has breached below its important support zone of 8955. The tremendous selling pressure has now caused the index to dip further beneath its daily moving average of 8985. Meanwhile, its momentum indicator is currently giving a strong sell signal and shows no sign of a reversing in the near future which has plenty of analysts considerably worried about its future. Lastly, the relative strength index is additionally giving a sell signal, which is of course a bearish sign.
Actionable Insight:
Short the DAX at current levels for an intermediate target at 8820, with a stop loss above 8955
