The DAX is getting itself into a tight coil and this seems to have become a trend as far as the DAX index is concerned. It just seems to have developed the habit of getting into a tight consolidation phase ahead of the important psychological region and it seems to be doing the more of the same now.
DAX Continues Consolidation
The same kind of price action was seen just below the 13000 region, where, despite all the good news around and despite the fact that the all time highs being blown through, the index could not make a break of that region and consolidated for several days before finally managing to do so. We are seeing some similar price action now just below the 13500 region as the US stock indices and many of the stock indices in Asia as well, continue to move higher and make all time highs almost on a daily basis but the DAX continues to lounge about.
This is despite the fact that the ECB had basically given the go ahead for a bull run in the stock markets by extending the QE by a year. This led to a short term rally in the DAX but since that time, it has been struggling to make much headway and continues to trade below the 13500 region. The incoming data from Germany and the rest of the Eurozone continues to be strong as usual but that seems to have had little impact on the DAX.
Looking ahead to the rest of the day, we do not have any major news from Germany but we have Draghi making a speech during the London session where he might seek to qualify why the ECB made a decision to extend the QE despite the incoming data pointing to the contrary. We expect a steady opening to the DAX index for the day and do not expect to see much correction in the short term.
This article was originally posted on FX Empire
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