What’s next? – DAX 08.06.17

DAX

The DAX index futures were trading slightly below the 12,700 mark in early trading on Thursday, after a strong correction in the previous session and ahead of key events later in the day.

Global optimism drove the German index to the 12,850 level in the first half of this week. Bullish momentum is still ongoing, despite the recent slump, especially looking at the daily chart. On the hourly frame, the index is reaching oversold levels.

Analysts said the drop could be attributed to the European Central Bank monetary meeting and the fact that German markets were closed on Monday.

The regulator is expected to keep its current QE program and interest rates levels steady. However, there are growing expectations on a change in the rhetoric over stimulus.

It’s not uncommon to see a retracement despite strong bullish sentiment, as global markets are under heavy pressure due to upcoming political events this week.

UK’s parliamentary elections, Comey’s testimony before the Senate and ECB’s press conference will be in focus on Thursday.

Also, traders are keeping an eye on next week’s Federal Reserve interest rate decision, which so far it’s very likely to happen.

The index is expected to consolidate at current levels and return to the upside channel.