No News Is Good News For The DAX
Jay Hawk | Nov 11, 2014 12:48PM ET
The DAX index is currently trading very flat. Traders are treating the price action very carefully as it has been incredibly volatile over the last few weeks. A surprising lack of economic reports coming out of Germany is the primary reason for the index’s stagnant price action.
A report released by research firm Sentix showed that overall investor confidence in the Eurozone area nudged minutely higher, although it remained sharply in negative territory. This positive news was offset by economic data from Italy, which showed that the country may be quickly heading towards a recession.
Many leading analysts are speculating that the European Central Bank will very soon be forced to introduce its own form of Quantitative Easing significantly earlier than expected, as all economic indicators are pointing toward a deceleration in economic growth. Traders would be wise to shift their focus towards the economic reports to be released out of the U.S. economy in the latter half of the session.
Looking at the hourly chart, the DAX is trading flat with a positive bias. Bulls and bears have been unable to make up their minds with regards to the price action. The only positive for bulls is the fact that the DAX currently trading above its 100-day moving average of 9255.
As of now, resistance for the DAX continues to remain near the 9443 level. Additionally, its momentum indicator is showing its first sign of a reversal, indicating heavy buying momentum at current levels. Lastly, the relative strength index is additionally trading with a positive bias, which is of course a positive sign.
Actionable Insight:
- Long the DAX at current levels with a strict stop loss below 9255, with a near term target at 9410.
- Short the DAX if it falls below 9255 for a short term target at 9143.
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