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DAX 30: Game-plan Heading into ECB Decision, Press Conference

DAX 30: Game-plan Heading into ECB Decision, Press Conference

2016-06-02 08:28:00
Paul Robinson, Strategist
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What's inside:

  • ECB front and center today, expect volatility
  • Stick to your trading plan, whether you are trading the DAX or another market
  • Don’t get caught chasing momentum for the sake of catching the ‘big move’

Today has potential to be a high volatility day for financial markets, with the DAX at the epicenter. At 11:45 GMT, the ECB is set to announce any changes it is making to its current monetary policy, and while no changes to interest rates or its QE program are expected, a short while later at 12:30 Mario Draghi will hold a press conference; his words could cause a few ripples as we have seen before.

No predictions will be made on this end about what the ECB may or may not do, or what Draghi may or may not say. What I will say is this: Expect the unexpected and don’t force a trade for the sake of making a trade in an attempt to try and catch the ‘big move’ because you’re afraid you may miss out.

If you are a scalper and have support and resistance levels already set up on your chart, and the market ‘acts right’ in accordance to your style of trading around those levels, then by all means do your thing. But, if you don’t have a plan in place and are just looking to catch some momentum because the DAX, or whatever market you are trading at the time, is making a ‘big move’, then sit on your hands. Just because a market is gyrating doesn’t mean you have to be involved. These events shouldn’t define your success in the long-run.

With that out of the way, we will quickly look at the charts and delve into specifics after the dust has settled. Who knows, maybe the DAX will have only traded in a 100-point range or less once all is said and done.

Since the power move higher last week above resistance, namely above the 10100 mark and trend-line off the November peak/’2011 trend-line’, we have looked for signs of prior resistance turning into support. Ideally, we see a solid test of 10100/150, then a strong push higher. If that area can’t hold as support and the DAX begins to sink lower towards 10k, the likelihood significantly increases that we see those sub-9800 levels from May revisited. Check out yesterday's article for additional technical considerations.

DAX 30 Daily(2-hr)

DAX 30: Game-plan Heading into ECB Decision, Press Conference

Chart created in Marketscope 2

Looking for more tips on how to navigate the markets successfully? Check out our free guide, “Traits of Successful Traders”.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX, or email him directly at instructor@dailyfx.com with any questions, comments, or concerns.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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