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09/22/2015 DAX

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Today’s sell-off in DAX was massive, especially during the morning. It’s hard to remember many days with such an aggressive move. As you know it was also due to the VW scandal.

DAX, 5 minute chart

DE30_23_50 22_09_5 minutes

DAX, Daily chart

DE30_23_49 22_09_daily

As you can see on the 5 minute chart, after the break of the 61.8% level it was pretty much a straightforward down move without any corrections beyond the 23.6% Fibonacci retracements level (The first ones are easy to see, I just left one on the final of the day – GMT+0).

However, notice that it touched exactly the downward daily channel, at 9.572, and found just a little buying pressure afterwards. Now it is on a very interesting point to trade, and I would recommend building a trading strategy based on the release of the PMI’s tomorrow, especially the one from China. You can see here a preview.

More specifically, I’m inclined to short (but with caution) if the PMI data are bad, after the break of the mentioned channel and with a first target (without seeing any inversion signs) at the 78.6% level. On the reverse, I would be more comfortable buying if PMI data is particularly good and you see a good price action above the downward line of the mentioned channel. Do not forget that Mario Draghi will also speak at 14h00 (GMT+0).

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