CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Dow, Nasdaq, and DAX retrace slightly, fresh shorts take profit

Relatively range-bound movement as investors await any trade and central bank updates.

Dow Technical analysis, overview, strategies, and levels

As far as sectors go, there were only a few of the Dow’s in the green which included real estate and consumer staples, while the underperformers were health care and tech with Apple at the bottom in terms of its components. And with earnings mostly out of the way and relatively light US data this evening, movement may be more limiting unless fresh news emerges on the US-China trade front, as optimism is already rising on the US-Mexico-Canada Agreement (USMCA) which could be finalized today as officials meet in Mexico City. Otherwise traders will have to wait for tomorrow's FOMC monetary policy announcement for clues regarding the central bank's forward guidance.

IG client and CoT sentiment for Dow

The slight retracement has already enticed fresh and range-trading shorts into taking profit, with retail bias dropping 6% to a heavy long 67%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

With indices globally in the red yesterday, the Nasdaq was no exception to that rule suffering a slight retracement but failing to undo its current technical overview of a stalling bull trend which on the daily level is showing more of its main technical indicators shifting back to neutral. With its fate (as well as plenty of other indices) tied to both central bank monetary policy and trade expectations, that’ll make Wednesday’s US Federal Reserve monetary policy announcement and any trade updates between now and December 15th’s additional US tariff application on Chinese imports of crucial importance.

IG client and CoT sentiment for Nasdaq

Unlike the Dow and DAX where shorts have been taking profit on the retracement, retail bias is unchanged here at a heavy long 75%, suggesting more downside bias may be needed in order for shorts to be able to unwind avoiding a loss.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Few of its components outperformed yesterday, and its been a shift in the DAX’s technical overview on the daily to a more consolidatory outlook but where its ADX (Average Directional Index) continues to show a propensity to trend. Contrarian breakout strategies may be more ideal once any trade updates occur and/or when the ECB (European Central Bank) meets this Thursday. Furthermore, while the daily technical overview is consolidatory, on the weekly it remains a stalling bull trend, suggestive that the time frame matters for those looking for intraday vs. interday trades.

IG client and CoT sentiment for DAX

In sentiment, the biggest move amongst the three indices occurred here with retail bias dropping 10% on yesterday’s limited price drop alone to a heavy short 63%, and suggestive that range-trading remains heavy amongst retail traders for this German index.

DAX chart with retail and institutional sentiment

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Be ready to act on ECB opportunities

Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.

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