Impact of European Central Bank’s Lending Survey on Credit Market and DAX Analysis

European Central Bank

The European Central Bank’s (ECB) interest rate decision last week was preceded by the release of updated credit data, revealing a reduction in general credit standards and, more concerningly, a significant drop in the demand for credit, according to a analysis. This could potentially affect investment, capital expenditure, and overall economic activity, particularly if businesses shy away from credit. If credit markets continue to decline, it may also weigh on the DAX, which is currently at elevated levels.

Analysis of DAX Chart and Retail Trader Sentiment

The daily DAX chart shows that prices are attempting to retest the 16,012 level before turning slightly lower. In the past two days, there has been reduced volatility in the market. This lack of volatility is not conducive to breakouts, and a propensity for range trading is expected. Resistance remains at 16,012, while support is at 15,660.

On the weekly DAX chart, the index remains within the long-term ascending channel, having surpassed 15.660, the next significant level that must be maintained for a bullish continuation.

Retail trader data shows that 21.81% of traders are net-long with a short to long ratio of 3.59 to 1, indicating that Germany 40 prices may continue to rise. However, changes in sentiment warn that the current Germany 40 price trend may soon reverse lower despite traders remaining net-short.

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