Good morning traders!
A strong bullish weekly candle closed on Friday, right in the middle of the August/September cluster and we have began a period of retracement from the recent slump. The initial signs suggest that we are about to experience a decent bounce and last week has began that move. A purely technical trader might be cautious and wait for a break above the 10530 level for a change in bias, but the more aggressive trader will already be long and wait.
However the Dax has a habit of punishing a trader and this current move may well prove to be a trap. I agree that the fed hike has been postponed which will relieve some of the concerns in the market and I agree that the QE theme is going to continue whilst again will support markets, but perhaps a lot of this has been priced in. The majority of analysts and banks are pointing towards the German economic data and playing the soft card citing emerging markets, Chinese weakness, US manufacturing and VW scandal as negative factors. When you consider how reliant Germany are on exports to US and Asia, you can realise how exposed Germany are to this. It’s difficult to remain bullish with all this going on.
I don’t claim to be very good at predicting market movements, but if I was pushed I would say I like a move higher in the short term. The focus this week is clearly going to be the release of the ZEW expectations on Tuesday, considering how good this indicator has been, historically, at predicting turning points in IFO expectations, this will probably provide some short term bias. After this, I reckon we hit the zone and another selling wave crashes ashore. But like I say, predictions are not my strength.
I am watching the pivot levels again today and I have my orders set up ready to trade them, I will post results tomorrow. Good luck today!
Dax Support & Resistance
|200 Day SMA||10664|