DAX index
Dax index spent most of the month in a horizontal consolidation. That is after it jumped higher following the bullish US equity market move after the elections.
However, at these levels, the Dax index looks a bit stretched. While the ECB two weeks from now will ease the monetary conditions further, there is still plenty of time until then, and a correction might be in the cards.
In other words, more ECB easing should favor a higher Dax. However, the index remains correlated with the US stock market, and in the two weeks left until the ECB decision, that correlation will likely remain in place.
The technical picture on the hourly chart shows a pattern that may act both as a reversal and a continuation. If bears believe a correction might be in the cards, then the safest way to trade it is to wait for the Dax to break below the lower edge of the pattern. By doing that, the index confirms the rising wedge, and the road is open to the measured move at 12,400.
On the flip side, a move above 13,400 will invalidate such a break, as it suggests an ascending triangle rather than a rising wedge.
