DAX Index Crashes Lower on Risk-Off
The DAX index broke lower on the back of worsening risk sentiment all acros the globe. We saw the Asian stock indices fall and the Euro stock indices fell as well. The DAX had been looking to move higher based on the sentiment around the QE and it looked as though the bulls would be able to manage to break through the long held resistance region but that was not to be.
DAX Moves Lower
Try as they might, they could not break through the 13200 region for the last 2 days and when the sentiment turned around the markets, the traders and the investors were only too ready to give up and run away from their trades by selling off. This pushed the DAX below the 13000 region for a brief while but the market recovered later in the day as the US stock indices picked up and the index managed to close very near the 13000 region for the day. That by no means guarantees that the move lower is over as yet.
Yesterday, the incoming data from the Eurozone also slipped up and unlike the previous times, when the DAX rose higher on bad data on the back of belief that the QE would be delayed that much longer, this time the index responded as it should be broke lower. This is likely to continue to happen in the short term as the incoming data from the Eurozone continues to show weakness which is then likely to affect the German economy as well.
The DAX is likely to continue to trade in a weak manner in the short term as the risk sentiment continues to take a hit but this can also be viewed as good correction for the traders and the investors to pick up some cheap stocks in the meantime. It would be advisable for the traders to wait for the index to reach the region of its last break and then go long on the index with proper stop loss.
This article was originally posted on FX Empire
