DAX recovers ahead of the ECB

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Yesterday’s focus was on the US Federal Reserve (Fed), whereby a speedier tapering of asset purchases that'll in turn end sooner combined with three rate hikes according to its dot plot for next year and rosier projections for economic growth and higher inflation failed to aid the US dollar with a decent risk-on move for primarily US indices.

But we're not out of the woods just yet when it comes to more fundamental updates given we've got the European Central Bank (ECB) up next even if it hasn't shifted its views on inflation from transitory as the Fed has done, where its projections and asset purchases for next year will also be updated. We’ve also got German preliminary PMIs today expected to show growth for manufacturing while nearly in the middle for its tested services sector, PPI and ifo's readings on offer tomorrow.

DAX technical analysis, overview, strategies, and levels

The reversal off of the lows has given a smaller boost for European indices when viewed in comparison with that of the US, and that meant although prices went beyond its previous first resistance level (and as of writing this morning hovering near it), the follow-through was limiting and offering conformist breakout strategies less to cheer about, the technical overview here remaining conflicting and where technical boxes can shift in this time frame with greater ease.

IG client* sentiment for the DAX

As for retail trader bias, it has been relatively close to the middle as of late failing to move to the extremes on smaller moves as has been the case historically where range-trading this index has usually been heaviest, yesterday’s price gains shifting it from slight buy 53% to the middle as of this morning.

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.}