DAX 30: Decisive Price Action May Be Delayed until the ECB meeting
- A decline to the 9336-9500 range may be what is needed before the DAX takes a leap higher, the alterative scenario being a break to the January 27 high of 9931, which may lift price to the January 13 high of 10,164.
- In the afternoon, U.S. Wholesale inventories are expected to decline by -0.2% MoM and may move the DAX, but decisive price action is likely to be delayed until tomorrow’s ECB meeting.
The DAX 30 appears to be in a corrective mode and may decline to the range of 9336 to 9500 before traders see the risk/reward ratio as sufficient enough for fresh bullish positions.
However, on a break to the February 29 low of 9336, the same bullish traders will most likely head for the exit as the trend may have rolled over at this stage and price may reach the February 24 low of 9112.
The alternative entry for bullish traders is a break to the January 27 high of 9931, as such a break may generate enough momentum to lift price to the January 13 high of 10,164.
What may determine what’s next for the DAX 30? I would say it’s the outcome of tomorrow’s ECB meeting.
Economist polling is projecting a reduction of the Deposit Facility rate. But will this be enough? And will lower rates hurt banks and drag the DAX lower? At this stage it’s too early to know, but by Friday morning and once the dust has settled post the rate meeting, we should be more informed.
DAX 30 | FXCM: GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
Struggling with Trading? Join a London Seminar