The DAX 30 has now reached our target of 9885 highlighted yesterday. Price is short-term oversold and a pullback is probably needed before price heads lower once again.
The short-term trend is bearish below the January 5 high of 10,397 and it would not surprise me if traders fade a rally in the 10,037 to 10,107 range. A correction to 10,107 represents a 50% pullback on the decline from the January 5 high of 10,397. The next level of support and profit target for bearish traders will probably be the October 6 low of 9735.
For the short-term trend to turn from being bearish to being neutral, a break to the January 5 high of 10,397 is most likely needed.
CSI 300 Slides, triggering a softer DAX
The trigger behind the latest decline is a slide in the Chinese stock market index, the CSI 300. This is said to have occurred following the decision by the Chinese central bank to set the Chinese yuan weaker and in turn to boost their exports. We note that the China CSI 300 index still has an 8 percent decline in store until it reaches its August low.
The data on tap today is the U.S. Initial Jobless Claims at 13:30 GMT. A Bloomberg survey projects an outcome of 275k. At this stage however, I don’t think it will prove crucial for stock markets.
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DAX 30 | GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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