DAX index – tactical sell
European markets slowly taking the cautious risk mood from the Asian session. What to expect today for German Dax index ? From fundamental viewpoint, there are many alarming signals. Look at IFO business climate index release yesterday – early indicator of economic development in Germany shows 99.2 vs expected 99.9. Perspectives of US-EU trade disputes and no indication of early truce from US-China front are another negative factors.
Yet, markets so far driven as a whole by US stocks optimism and corporate reporting season helps to support it. Today it will be another key day for earnings with Intel and Amazon due to report, so watch carefully for US markets.
Technical view is generally bullish if you look at this powerful up-trend, however, the selling pressure is mounting and the lines on a 4-hour chart are overextended, indicating extreme overbought situation.
Hence, I would bet with tactical sell trade from current levels with mandatory and firm stop loss above recent maximum – i.e. at 12350. Price will likely to correct towards 12260 or even further to 12060, before another bullish impulse is taking its turn. That is how I see the price action, however, this is a risky trade due to its counter-trend nature – and at the same time very rewarding if successful. For trend-following conservative traders I will recommend wait for possible correction and if any – then enter longs at 12200 and 12130 – i.e. in between the projected possible correction distance.
Have a nice day,