Dax Technical Analysis 08/09/2016

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Hello traders!

It’s ECB day today and all eyes turn to what the committee have decided in relation to interest rates and other monetary policy matters. We should find ourselves breaking the range in one direction or another today.

Many analysts are expecting a quiet ECB outcome based on the fact that sentiment has held up despite the problems expected with the Brexit vote. QE purchases are expected to be extended based on the lack of inflation trend, but it may not happen today. There is a scarcity of German bonds at the moment, so perhaps the ‘do nothing’ prediction will be a close one. Other tools could include hints at buying additional asset classes, such as assets it accepts as collateral.

I am staying away from this today. If you asked me which side I would take, long or short, I would concede that it’s purely a gamble, 50/50, but I would choose long.

There was some bearish divergence on the 5 minute chart, comparing yesterday afternoon high and the high of this morning, with the highs on the MACD. The sell off down to the daily pivot was a nice trading opportunity that I missed which offered around 4:1 reward to risk. If this continues to move down, then the S1 is an interesting target area. But at the same time, if the daily pivot holds, we have a great long opportunity setting up (current price 10732).

Keep your powder dry today!