It’s Tuesday, May 13th, and we’re entering the midpoint of a crucial trading week. With U.S. inflation data due later today and European markets showing hesitation, the DAX is setting up for another technical showdown. Let’s break down what happened yesterday and where price action is likely headed.
🧾 Market Recap – Monday, May 12th
📉 Cautious Optimism on Thin Volume
The DAX hovered around the 23,600 zone on Monday, trading with low conviction ahead of today’s CPI report from the U.S. While early weakness in the session followed Friday’s soft U.S. jobs data and renewed Middle East tensions, buyers stepped in during the U.S. afternoon to hold support levels.
- Macro Headlines:
- ECB’s Schnabel reiterated that a June rate cut remains “likely,” though policymakers want to assess wage data.
- Geopolitical risk in the Middle East continues, but impact on European indices remains contained for now.
- Germany’s own economic data was light; industrial production showed only a modest improvement (+0.2%).
🔍 U.S. CPI Looms Large
The next directional catalyst is today’s U.S. CPI (14:30 CET). A softer print could ignite risk-on flows, particularly in equities and cyclical sectors, including DAX components like Siemens and BASF. However, any upside surprise in inflation could jolt yields and pressure risk assets.
📊 Technical Outlook – Tuesday, May 13th
🔹 Chart 1: EMA Cross, Volume & RSI
- Price is hovering just under the 21 & 50 EMA cluster (23,610–23,620), showing compression and indecision.
- Short-term momentum favors the bears after a failed rally and a breakdown below all short EMAs.
- Volume: Spike near the 08:00 selloff suggests stronger institutional involvement at that time.
- RSI: Currently at 43.60, below its signal line (46.41), confirming weakening momentum with no divergence, which opens downside risk to the 23,500 handle.
🔹 Chart 2: Bollinger Bands & ATR
- Bollinger Bands are narrowing, suggesting a volatility squeeze is underway.
- The price is hugging the lower band near 23,579, hinting at a potential downside breakout unless bulls reclaim the midline (~23,618).
- ATR: Very low (24.55), reflecting tight ranges — usually a precursor to a directional breakout.
🔹 Chart 3: MACD & ADX
- MACD: Bearish crossover with increasing negative histogram bars, suggesting bearish continuation.
- ADX: Down to 13.18, confirming that trend strength is fading. However, this often precedes the birth of a new trend as volatility recharges.
🎯 Trading Signal – SHORT BIAS
Setup:
- Entry: Below 23,560
- Stop Loss: 23,710 (Risk: 150 points)
- Target: 23,110 (Reward: 450 points)
- Risk-Reward: 3:1
Rationale: The compression across EMA clusters, weakening RSI, MACD crossover, and hugging of the lower Bollinger Band suggest a downside resolution is more likely — especially if U.S. CPI comes in hot.
🗓️ Economic Events to Watch
| Time (CET) | Event | Impact |
|---|---|---|
| 11:00 | German ZEW Economic Sentiment | High |
| 14:30 | U.S. CPI (YoY & Core) | 🔥 Very High |
| 16:00 | U.S. Fed’s Barkin speaks | Medium |
Expect most DAX movement to remain muted until the U.S. CPI lands. Any positive surprise on ZEW could provide a short-term bounce, but broader trend hinges on inflation data.
📌 Summary & Key Takeaways
- The DAX is in a technical stalemate near 23,600 but leaning bearish.
- Momentum indicators are weakening, and volatility is compressing, pointing to a breakout soon — likely to the downside.
- U.S. CPI will decide today’s fate, with traders eyeing 23,500 support and 23,710 resistance.
- Maintain flexibility: a dovish CPI could ignite a squeeze to 23,800, but until then, the edge lies with the bears.
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📖 For broader context: ECB June Rate Cut Signals Mount
Let’s trade smart — volatility is on the horizon. 👊
