The DAX rose amid speculation that slower growth will prompt policy makers to accelerate stimulus. The European Central bank meeting would be closely watched by investors to understand the steps taken by ECB President Mario Draghi with regards to the bond buying program that has been hugely speculated upon.Traders expects the ECB to implement fresh measures as a way to shore up long term inflation expectations, which has persisted below the ECB’s target rate of just below 2%.
Mixed economic reports out of the euro-zone push the traders for action while unemployed people in Spain rose by 8,100 in August, far below expectations for an increase of 26,000 In July. Yet, the manufacturing and factory order reports coming out of Germany and other major euro-zone economies showed contraction and are clearly falling towards levels below 50 which indicate towards de-growth.
Traders are closely watching the developments in Ukraine as any further escalation can lead to a swift sell-off in equities as investors switch from the “risk on” trade to the “risk off” trade.
On the daily charts for DAX, the index seems to be trading in a very narrow trading range. The index in yesterday’s trading session saw itself recover from the lows of the day but traders should bear in mind, the price action was on the back of thin volumes and therefore not a lot could be made of the price action. The support for the index remains to be around 9,376 and the resistance on the upside continues to be at 9,540 which is the 100 day moving average for the index.
The momentum indicators are currently in bearish territory and aren’t showing any signs of strength which is a cause of concern for the bulls. Actionable Insight: Short DAX if it falls below 9376 with a stop loss at 9540 and a target at 9,100 Long DAX only if it closes above 9,560 for a target at 9,850 with a stop loss at 9,380.