“Chop fuels the trap, trap fuels the squeeze.”
Good morning traders. It’s Wednesday, and the DAX is trying to digest yesterday’s heavy swings. After a dramatic bear trap Monday, Tuesday brought consolidation, rejection from resistance, and another test of nerves for both sides. Today, we’re back to navigating a narrowing range — with key catalysts still lurking. Let’s break it down.
📉 Market Recap – Tuesday, May 20th
The DAX started with bullish follow-through early Tuesday but failed to break the 24,100 zone meaningfully. The session played out in two parts: an early extension higher (tapping key resistance) and a rejection followed by range-bound drift.
Key Drivers:
- Eurozone Consumer Confidence came in slightly weaker than expected (-14.6 vs -14.5), confirming the fragile sentiment across Europe.
- U.S. Fed Speakers maintained dovish tones, reinforcing the market-friendly stance, though there was no fresh fuel from the macro side.
- Options expiry positioning seems to be influencing the index, with volatility compressing intraday.
🔻 Net Result: DAX chopped in a 150-point range, failing to close decisively above the 24,058 level. Bulls are still in control, but they’re losing momentum.
📅 Economic Calendar – Wednesday, May 21st
🕰️ Events to Watch:
- 🇩🇪 Germany PPI (08:00 CET) – Out: -0.2% MoM vs -0.1% expected. Further confirms disinflationary trend in Germany.
- 🇪🇺 ECB Schnabel Speaks (13:00 CET) – Traders will watch for any language on rate cuts timing.
- 🇺🇸 Fed Minutes (Late) – Although already hinted dovish, full minutes tonight could shape risk sentiment tomorrow.
🧠 Macro Implication: Falling PPI keeps pressure off the ECB, supporting equity valuations. However, lack of new positive macro fuel means the DAX might rely on technical levels today.
📈 Technical Outlook – Wednesday, May 21st
📍 Chart 1: EMA Cross, RSI, Volume
- EMA Cross: All short EMAs (3/5/9) are aligned bullish. Price recently rebounded from 23,900 with conviction.
- Volume: High volume confirmed the morning reversal. Pullback volumes remain low = constructive for bulls.
- RSI: Currently at 53, recovering from oversold conditions and trending upward.
➡️ Signal: Short-term momentum remains bullish, with healthy pullbacks.
📍 Chart 2: Bollinger Bands & ATR
- Bollinger Bands: Price bounced from the lower band and tested the upper one, now pulling back slightly.
- ATR: Rising to 18.4, indicating elevated volatility — expect wide ranges to persist.
➡️ Signal: Breakout conditions remain valid. A squeeze above 24,067 could extend gains sharply.
📍 Chart 3: MACD & ADX
- MACD: Bullish crossover confirmed, histogram printing green, though momentum shows signs of slowing.
- ADX: Still strong at 27.5 — trend strength is high, even as MACD lags slightly.
➡️ Signal: Trend remains valid, though some caution on momentum cooling is advised.
📍 Chart 4: Support & Resistance
- Resistance: 24,067 → yesterday’s rejection zone.
- Support: 24,026 and 23,914 → previous demand zones.
➡️ Signal: If price holds 24,000–24,026, bulls may retest 24,067 and aim higher. A loss of 23,914 would reintroduce selling pressure.
📍 Chart 5: 40 SMA (15 Shift)
- Trend: Price recently reclaimed above the 40SMA, which is turning up. Candles have shifted to bullish coloration.
➡️ Signal: Medium-term trend has flipped back up. As long as we stay above 23,950, the bullish bias is active.
📍 Chart 6: Peak Reaction Zones
- Upper Zone: 24,096–24,067 → yesterday’s top.
- Lower Zone: 23,947 → key intraday demand.
➡️ Signal: Price currently sandwiched between reaction zones. Break above = breakout. Drop below 23,947 = test of broader structure.
📍 Chart 7: Daily Pivot Points
- Pivot: 24,022
- R1: 24,133
- S1: 23,948
➡️ Signal: Currently trading near pivot. Bullish bias holds above 24,022. Breach of S1 opens up 23,804 retest.
🎯 Trading Signal – Bullish Breakout Setup
- Setup: Buy breakout above 24,070 with confirmation
- Entry: 24,080
- Stop: 23,940 (140 pts risk)
- Target: 24,500 (420 pts gain)
- Reward/Risk: 3:1
- Rationale: Strong EMAs, MACD support, price pressuring upper reaction zone, volatility expansion via ATR.
🧩 Summary – What’s Driving the DAX Today?
✅ ECB disinflation narrative supports risk
✅ Technicals lean bullish – trend strength is rising
⚠️ Momentum is slowing, risk of another range-bound trap
📍 Key level to watch = 24,067. Break and hold above = open sky to 24,300+. Below 23,947 = false breakout trap potential.
Stay nimble, stay technical. For intraday commentary, join us on Telegram:
👉 https://t.me/thedaxtrader
