The DAX opened higher but was unable to sustain itself in the early afternoon session today. The DAX is continuing to trend downwards, with its next support level coming near the 9897 level. Many are assuming that lower than expected composite manufacturing activity numbers, which are pointing to an apparent slowdown in German economic activity, caused the index to fall. Additionally, a perceived economic slowdown in China is contributing to the DAX’s woes, as China is one of Germany’s biggest trading partners.
Investors should keenly tune in to tomorrow’s European Central Bank meeting. Many leading analysts expect the ECB will keep interest rates at record lows while additionally shedding some light on their bond-buying program, which is generally considered to be positive for equities. The Federal Reserve on the other hand, which ended its bond-buying program in October and is soon expected to raise short term interest rates will almost certainly be negative for the Eurozone economies in the short-term. Furthermore, traders should closely pay attention on Friday to the U.S.’s upcoming NFP in order to receive some sort of an insight as to the overall strength of the U.S. labour markets.
When looking at the hourly chart for DAX, its momentum indicators are giving a fresh sell signal, which is undoubtedly a bearish symbol and points towards an impending market downturn. Lastly, its relative strength index is indicating no signs of reversing and is now trending downwards.
Short the DAX at current levels for an intermediate target at 9890, with a strict stop-loss above 9985.