The volatility of the DAX index has been reduced to a dribble over the last couple of days as the ranging and consolidation continued in the index yesterday as well. The investors are not yet sure which way the market is going to move in the short and medium term and they do not want to commit themselves in such a situation.
DAX Looking for Direction
But the fact that we have had a bounce from the lows and the fact that the bounce has been quite strong, should give some hope and confidence to the bulls and make them anticipate a leg higher once this period of consolidation and ranging is over. It looks as though the investors and the traders seem to be waiting in anticipation of some major fundamentals and economic data to drive the next move. The lack of any economic data and fundamentals over the last couple of days could also be a reason for the market to be quiet.
That push could come in a day or two as we look forward to a slew of data from Germany, the Eurozone and the US as well. We have the advance GDP data from Germany during the London session today and that should give us a glimpse of how well the economy is doing, especially at a time when the government is under some political pressure. Then this would be followed by the flash GDP data from the Eurozone which is also likely to have an impact on the stock markets as it is likely to influence the withdrawal of the QE.
Later in the day, we are going to see the retail sales and the inflation data from the US and though it is unlikely to have a direct impact on the DAX, it is likely to buoy the US stock markets and help it come out of the rut and this could influence the DAX as well and then we could probably see a run higher in the short term in the DAX and the other markets as well.
This article was originally posted on FX Empire
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