Breakout strategies outperform as DAX suffers, ECB up next
Weeks of majority short retail sentiment ends with a shift to slight buy as averaged in shorts work their way out.
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DAX technical analysis, overview, strategies, and levels
When the volatility gets going here, it can be swift and easily give breakout strategies the net edge, and such has been the case when it comes to the Germany 40, conformist strategies in play and outperforming heavily with a move beneath both of its previous support levels, and as with the FTSE 100 and Wall Street tilting some technical boxes into the red on the daily time frame, a negative DMI cross occurring with prices not far off another key long-term moving average.
Only a handful of its components finished in the green and even then the percentage gains were small, the clear majority in the losses led by Siemens Energy (JP Morgan Private Equity Ltd cut to neutral), car companies also suffering.
In terms of the economic calendar, there was a German bond auction yesterday showing a worsening bid-cover ratio, and up next we get trade data with Consumer Price Index (CPI) figures tomorrow, though none of it is expected to be as impacting as today's European Central Bank (ECB) monetary policy announcement, where although no changes are expected in rates, there might be a monthly purchase reduction for PEPP, and where projections on growth and inflation will be closely watched following what has been disappointing data and year on year CPI at 3% for the Eurozone.
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Current technical overview |
Consolidation - Volatile |
| Technical overview conformist strategies | Buy first resistance upon breakout from below, sell first support upon breakout from above |
| Technical overview contrarian strategies | Sell first resistance after reversal, buy first support after reversal |
| S/L for second resistance | 15832 |
| Second resistance | 15789 |
| S/L for first resistance | 15747 |
| First resistance | 15704 |
| Relative starting point | 15619 |
| First support | 15534 |
| S/L for first support | 15491 |
| Second support | 15449 |
| S/L for second support | 15406 |
IG client* sentiment for the DAX
In sentiment, range-trading is known to be heavy (if not heaviest) when it comes to retail traders and the Germany 40, and the oscillations have helped plenty of shorts that were stuck average out. Yesterday’s big price drop has caused the bias to shift from majority short 62% to a slight buy 52%, ending sell bias held by them since July.
DAX chart with retail sentiment
*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
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