DAX Xetra (cash index)
After a remarkable rally during yesterday’s session, the DAX is suddenly eying a test of the key May high at 13,204.
Fundamental events can sometimes completely take over and the dovish take from the ECB monetary policy decision yesterday hit the euro and subsequently allowed the DAX to soar higher by 217 ticks on the day.
This move higher has shown little sign of reversing today either.
Momentum signals on the daily chart are swinging positively now with the RSI above 60, MACD lines bullishly crossing and Stochastics also decisively gaining.
Technically the market ideally needs to settle down before getting a true gauge of whether this move will be sustained.
Hourly momentum is stretched near term following the sharp gains and this could begin to limit the upside, or even drive a slight unwind.
With volatility elevated near term, it is difficult to trade the DAX with conviction for now.
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