The overall trend is bullish above 10,866 and I see no reason for traders to change their bias so long as the DAX 30 remains above this level.
As the trend is bullish, traders will probably buy a dip in levels where the risk-reward-ratio favors long positions, like the 11,059 to 11,177 zone, or buy a bullish breakout e.g. a break to last week’s high of 11,367.
We note that the technical situation for the DAX is not much different to the FTSE 100, where profit taking after last week’s good gains seems to be the norm.
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German CPI and Chicago PMI on Tap
German inflation data is on tap today and is key for the prospects of further ECB stimulus. However, the reading of German EU harmonized inflation is running at 0.2% YoY and expected to print 0.3% (Bloomberg News Survey). Inflation would probably need to remain above 1.3% before there is any talks about the ECB scaling back their QE program. The bar is therefore very high and I doubt this will be a market moving event until mid or late 2016.
Today’s market moving macro statistics will probably be Chicago PMI, which is expected to print 54 from 56.2 (Bloomberg News Survey). This economic indicator was nearing alarmingly low levels at the beginning of the year, but has since recuperated. Strong gains in new orders and production triggered the last round of gains. U.S. Pending Home Sale and Dallas Fed Manufacturing Activity for November are also on tap and expected to print 1.0% (MoM) and -10 respectively but I doubt whether these two indicators will have a long lasting impact on the market, and traders will probably use soft data and a lower DAX as an opportunity to buy dips.
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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