DAX: Breakdown Unsustainable, Same Old Range Ahead of ECB
- The DAX breaks down intra-day, but recovers back inside range
- Day-traders might find opportunity, but swing-traders will need to be patient
- ECB tomorrow
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On Monday, we said we were waiting for the DAX to break free of the recent trading range before drawing any conclusions about near-term direction. Indeed, we a saw a range-break during the first part of the session, but a strong recovery took shape in the afternoon; this put the market back inside the same old range we’ve been operating with since the second day of the month. Choppy trading conditions continue to dominate, making it difficult to get a good handle on where the market will go next. This type of trading environment is best left up to the nimble day-trader, swing-traders your time will come.
Yesterday’s drop and reversal could be construed as a modestly bullish event by not only closing back inside the 2 ½ week range, but also by rebounding from range support formed to end 2016. The low yesterday was at 11425, and as we’ve been saying, if the market is to roll over it will need to close below 11400 before the market’s bias turns negative. We’re still giving the benefit of the doubt to the trend higher following the December breakout.
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The best spot in our book at the immediate moment is on the sideline. Again, if you’re a quick-flipping day-trader, then opportunity is still out there. However, if you look beyond the intra-day time-frame, the market isn’t presenting much to work with. That’ll change, just need to demonstrate a bit of patience in the meantime.
Heads up: ECB meeting tomorrow, so expect heightened volatility. Fireworks start at 12:45 GMT. For details of times and other data releases/economic events, please see the DailyFX Economic Calendar.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.