The DAX price drifted slowly higher this morning off the back off positive data out of Germany. The German Retail Sales rose 2.5% coming in at 2.9% vs an expected 0.4% MoM and was also up YoY at 5.3% vs an expectation of 2.7%.
However, the price failed to move with any conviction above yesterday’s high of 11454 and rotated lower. Price continued lower breaking through the 5min 100 moving average (blue line in chart below) and through the 200 ma (green line) off the back of weaker than expected European PPI data. The Producer Price Index is a measure in the change of the price of goods sold by manufacturers. It is an indicator of consumer price inflation, which accounts for the majority of overall inflation. It came in at -3.4% YoY vs an expected -3.0%.
After the sharp sell-off, price came back up to retest the 200 ma, but failed to break above it and continued lower. The price broke through the key level of 11400, and met resistance at the 11381 level just above the Daily S1 Pivot which comes in at 11379.
Looking at the Hourly chart below, one can see the divergence forming as the price is still continuing to move higher but momentum is moving lower. The average trading range for the last 22 days is 153 pips. The range today is 85 pips so far, giving a possible downside target for bears of 11313 which is just below the Hourly 100 moving average at 11325. However if price closes above 11434, which is the 61.8% retracement of today’s move lower, then the bulls will be firmly back in charge and a move towards 11500 should be on the cards, with upper limits of 11508 Daily R2 Pivot, 11522 the daily range extension.
