The DAX is rangebound over the last three days with Friday’s high of 10,123 (NFP high) capping price, while this week’s low of 9,659 is supporting price.

As the trend is bearish since December, the primary bias for the German DAX is to trade downwards. The index may reach 9,659, and (in the case of an extension) the psychological level of 9,500.

If the DAX was to break Friday’s high then this may open the door for a rally towards the January 5 high of 10,397. This is also my preferred scenario as the DAX is merely 4% away from its September low and 16% from its December high. This tilts the risk-reward ratio in favour of bullish traders (download this guide for more on the topic). The DAX is also range bound after the NFP printed near 300k vs. a 200K expected. The approximate 300K reading is very strong and tells us that the U.S. economy remains on track.

The situation is similar for the S&P 500, and a break to its high of 1937.5 will turn it bullish. With this in mind, we might get a strong bullish reaction if the DAX and S&P 500 were to break their Friday highs, but until this happens, both indices may drift lower in line with their bearish trends.

Small Business Optimism Index

There is no relevant DAX data on deck this morning.

In the afternoon U.S. NFIB Small Business Optimism and JOLTS Job Openings will be published. The former is a “PMI/ISM” constructed by surveying 800 small business about their business conditions. The median projection of the 21 analysts polled by Bloomberg News is 95, from 94.8 in November. A higher reading than expected suggests small firms are more upbeat than expected. This may boost the DAX, while a lower reading than expected will encourage bearish to remain bearish.

JOLTS tracks the number of job openings in the U.S. economy and traders use it as it has a very high correlation to the U.S. unemployment rate. A Bloomberg survey projects a rise in outcome of 5440 from 5383 in October.