Good morning traders! Midweek action is heating up, and after yesterday’s volatile grind, the DAX is shaping up for some critical directional choices. Let’s jump into what’s moving the market and lay out a strategy for the day.
📈 Market Recap – Tuesday, May 27, 2025
🔹 Key Drivers:
- Wall Street closed flat amid mixed economic signals, giving European indices little fuel overnight.
- German GfK Consumer Climate came in slightly better than expected (-23.5 vs -24.0), helping sentiment early in Tuesday’s session.
- Tech and Industrials led the DAX’s intraday rally before momentum faded into the close.
- Volume spikes during the morning and early U.S. session indicate institutional activity, but end-of-day softness suggests cautious positioning.
📅 Economic Calendar – May 28, 2025
Today’s data calendar is relatively light, but watch out for:
- Eurozone M3 Money Supply (09:00 GMT) – A potential clue on ECB policy bias.
- U.S. Crude Oil Inventories (14:30 GMT) – May affect energy-heavy stocks like Siemens Energy.
- Speeches by ECB’s Villeroy and Schnabel throughout the day may impact rate expectations.
Overall, this leaves the DAX more reactive to technical levels and U.S. equities today.
🧠 Technical Analysis – Wednesday Session
📊 Chart 1: EMA Cross, Volume, RSI
- Strong EMA bull cross sustained since early Tuesday.
- Volume surged during morning breakout, dipped midday, then spiked again late session.
- RSI peaked near 70 and is currently retracing to 50. Bullish momentum is cooling but intact short-term.
Takeaway: Momentum is slowing, but the trend hasn’t flipped. A break below EMA zones would be a warning sign.
📊 Chart 2: Bollinger Bands & ATR
- Bollinger Bands widened during the morning rally, but are now tightening – indicating a volatility squeeze is in progress.
- ATR has risen again slightly after declining for most of Tuesday, hinting at potential breakout conditions.
Takeaway: Market is compressing – be on alert for an impulsive move.
📊 Chart 3: MACD & ADX
- MACD histogram shows a bearish cross forming post-spike.
- ADX at 21.22 – above the threshold, confirming trend strength is present.
Takeaway: Trend remains alive, but MACD says short-term correction risk is real.
📊 Chart 4: Support & Resistance
- New resistance formed around 24,315–24,330 after a failed breakout attempt.
- Key support now rests at 24,207, which has been tested twice.
Takeaway: Watch for a break of 24,207 to confirm downside; above 24,330 reopens the upside path.
📊 Chart 5: 40 SMA (15-Period Shift)
- Price reclaimed the shifted SMA with bullish intent early this morning.
- Colour transition confirms momentum shift back to bullish (teal candles > orange).
Takeaway: Medium-term trend tilting bullish again – unless price slips back under 24,252.
📊 Chart 6: Peak Reaction Zones
- Key zones:
- Upper zone: 24,330.8 – major intraday rejection seen here.
- Lower zone: 24,207.2 – respected as bounce point overnight.
Takeaway: This 120-point box defines the range for the next breakout play.
📊 Chart 7: Daily Pivot Levels
- Today’s pivot: 24,184
- R1: 24,410 — aligns with yesterday’s upper wick.
- S1: 24,060
- S3: 23,711 — potential downside target if major support fails.
Takeaway: Price currently dancing near R1 and daily pivot – watch for acceptance or rejection at these levels to confirm direction.
🎯 Trading Signal – Intraday Setup
📍Signal: Breakout Buy above 24,330
Entry: 24,335
Stop: 24,215 (120 pts risk)
Target: 24,695 (360 pts reward)
R:R Ratio: 3:1
Bias: Bullish but cautious – breakout confirmation required
Alternative setup: Short below 24,207 with a 3:1 target to 23,850 (pivot zone), if bearish momentum resumes.
🧩 Synthesis & Outlook
We’re at a make-or-break junction. While macro drivers are light today, the technicals suggest the DAX is prepping for a breakout move, with narrowing bands and conflicting short-term momentum. Traders should monitor the 24,330 resistance and 24,207 support zones closely — both could act as springboards.
Watchlist for today:
- Breakout confirmation (volatility likely to return)
- U.S. market correlation in the afternoon
- ECB commentary
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