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DAX 30: Too Early to Call a Low

DAX 30: Too Early to Call a Low

2016-01-18 10:55:00
Alejandro Zambrano, Market Analyst
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Talking points

  • The German DAX 30 (FXCM: GER30) is bearish below Thursday’s high of 9949
  • Drivers of this bearish trend are soft commodity prices, the soft Chinese stock market, a weakening Chinese Yuan, and very soft U.S. data.

The German DAX 30 (FXCM: GER30) is bearish below Thursday’s high of 9949 and I expect traders to see a correction to the 9678-9800 range as an opportunity to short-sell the DAX 30. The risk/reward ratio favours short-potions in this range with a stop low above Thursday’s high.

The 9678 level is the lower limit of this range and at this level the DAX 30 will have corrected 50% of its decline from 9949. If the DAX was to break Thursday’s high of 9949 it may rally to Wednesday’s high of 10,168.

Drivers of this bearish trend are soft commodity prices, the soft Chinese stock markets, a weakening Chinese Yuan, and very soft U.S. data. I don’t expect these drivers to turn positive at this stage.

Last week U.S. Retail Sales Control Group declined by 0.3% MoM vs. +0.3% projected by a Bloomberg poll. Empire Manufacturing slipped to -19.37 vs. the -4 expected, and Industrial production declined by -0.4% MoM vs. the -0.2% estimated. Good data was U.S. U. of Michigan Sentiment, which printed 93.3 vs. 92.9 estimated. There is no important data on tap today as it’s a public holiday in the U.S.

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DAX 30 | FXCM: GER30

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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

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