DAX Price Action Setup: ECB Volatility Muted, Eyes on US Data

DAX Price Analysis & News

• DAX at Best Level Since Mid-2018
• ECB Unlikely to be Significant Market Mover
• Watch out for Auto Tariff Noise in Weeks to Come

DAX | The index has extended its recent gains to trade at its highest level since mid-2018 and edging ever so closer to the psychological 13000 level. Alongside, the improved risk tone, the DAX has benefited from the upside in Daimler shares after the automaker reported better than expected earnings. As such, in light of the DAX continuing to press for better levels, 73% of stocks in the index are now trading over its 200DMA.

However, as we noted on the recent equity update, the relative strength index is continuing to show a negative divergence, which continues to suggest that the upside in the DAX may begin to show signs of fatigue and thus leave the index vulnerable to a potential pullback. Alongside this, on the macro front the key focus for the DAX and automakers in particular will be whether the US look to impose tariffs on EU autos with the deadline approaching in mid-November.

ECB Meeting: Farewell Draghi

Today will mark ECB President Draghi’s final meeting and as such, given last months September QE package we expect little in the way market movement with rhetoric likely to remain unchanged from the prior month. Thus we look towards the US flash PMI surveys as the next catalyst to dictate price action.

DAX Price Chart: Daily Time Frame (Sep2017 – Oct 2019)

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX