The German DAX tumbled 1.5% yesterday and stocks may open a tad lower again today as trade worries persist and investors await the US employment report for clues about the pace of interest rate hikes. Bears seem to be taking control as trade worries drag on. Once again it will be the U.S. wage data that will help to determine the direction of the markets. The economic events calendar has Services PMI readings from Germany and the Eurozone this morning.
From a technical perspective, we expect a weak opening in the DAX again as US stock markets fell yesterday. The German index crossed the 200-period moving average yesterday on a 4-hour chart falling below its €12,640 support and clearly reversing the uptrend. We are now trading in dangerous territory, and so the weakness is expected to continue with the €12,410 level as key support.
Support: 12410 12160
Resistance: 12640 12765