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DAX index price action


European equities opened on softer mood  following the negative sentiment spilled over from Asian stock market and US  e-minis which are down by more than 1%. Last week US-China trade talks failure was spectacular and then Trump’s two tweets over the weekend have demonstrated how far the division is at the table talks. 

Anyway, there soon will be Chinese official report on talks and it probably will be negative too, however, in a typical Asian style will likely to leave doors open for the further talks. Now, this is a good gauge the market mood – if it is still bullish, it will perceive Chinese statement as a positive and we will see bounce again.

DAX index 1 hour chart

Technically picture is rather ambiguous. Mid-term trend followers will likely to consider to buy at these levels, as the correction is sufficient enough to  jump into  bullish train. We have repeatedly seen as prices start climbing no matter what and central banks political position makes investor pretty confident that everything will be done to lift markets. Besides, the failure of US-China talks seems to be priced already.

Dax cash index opened with gap and we expect the gap to be filled. Buy at current levels and put the stop below 12020 which will indicate the break below local trend-line. Above, however, there is a cluster of resistances at 12140, 12205 and 12245, all of which represent a major barrier before rally is possibly resume. Breaking above 12245 means the bullish trend is on full throttle again, while breaking below 12020 is less likely and will be followed by repeated chaotic bounces and drops. I do not like to go short in these circumstances.

Have a nice day and profitable trades,

Fuad