European indices traded higher on Thursday and the DAX rose by 0.55% as market participants respond to the Fed’s rate cut from the previous day. Today, Germany published PPI data which showed a decline of 0.5% during the month of August. Furthermore, economic data is limited to the Eurozone's consumer confidence figure which may have an impact on price action today. Apart from the data, two Fed members are scheduled to speak today and any hints on future monetary policy could influence the DAX. On the global trade front, the US and China continue their two day trade discussion which markets will be monitoring in hopes of a semblance of progress. Apart from trade headlines, traders should look to Brexit developments to assess the current global economic outlook.
The DAX gained 68 points to end at 12457 on Thursday. The price managed to hold above the 20-period MA and trade above the 12400 level. Today, look for a sustained move above 12450 to maintain buying pressure and lead the DAX to test the resistance zone of 12500/12520. On the other hand, a trade below 12400 would indicate selling pressure with immediate support found at 12300. Below 12300 the index would target the lower support levels at 12250 and 12200. A break below the latter level would signal further weakness is to come. Until we see price exit the range of 12500-12300, the Dax’s direction will remain indefinite.
Resistance: 12520 /12600