In the days following the latest ECB rate meeting, the DAX 30 breached its January 27 high of 9922, an act which has invariably propelled price higher, but what is the health of the overall trend?
The overall trend is bearish since March 10, 2015 as clearly seen in the chart below. This is supported by the ever lower highs, and the downward tilting trend line from the March high.
The ECB rate meeting was able to add momentum to the bullish trend which has been in place since mid-February 2016 and price has subsequently breached its January 27 high of 9922. The same trend will remain bullish above the ECB low of 9400 and the next target within range for bullish traders may be the January 13 high of 10,166. The next target beyond the January 13 high may be the December 29 high of 10,878.
Trading much higher than the December 29 high of 10,878 may be hard at this stage given the downward sloping trend line from the March high found near this level, which may limit price. In the vicinity of the trend line, the risk/reward ratio may also be favorable toward a bearish view, hence it would not surprise me if traders will be on the lookout for a short-term trend reversal near this line.
For now though, the ECB low of 9400 is the trend defining level and the short-term trend is bullish above it.
DAX 30 | FXCM: GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
