Dax Index Remains Bid But Clash Over EU Budget Weighs

Summary:

Dax index at crossroads as the EU members clash over the Recovery Fund. Bearish break favored as we head toward the end of the trading month.

The Dax index keeps holding the current levels despite not so good news from the European front. Poland and Hungary stand on their positions and continue to block the Recovery Fund. Moreover, there is another issue regarding the European ski resorts – should they remain closed for the winter? Austria doesn’t want that.

These are just a few examples of the difficulties that the European Commission faces at the end of the trading year. Any escalation on the EU Recovery Fund next week should weigh on the Dax index.

Also, the price action seen this week is due to the U.S. stock market having a shorter program than usual due to Thanksgiving. Starting with next week, the price action should increase in momentum.

Dax Index Technical Analysis

The technical picture shows a mixed setup. On the one hand, the bigger triangle (i.e., the one in black) points to more continuation. It looks like a pennant. On the other hand, the price action that followed (in blue) looks like a rising wedge – a reversal pattern.

The safest way to trade this is to wait for a breakout. A move below 13,100 should trigger more downside, while a move above 13,500 should attract more bullish interest.