Dax Index made heavy gains on Friday despite disappointing PMI figures from Germany and Eurozone. The market reacted to macro-economic data pointing to China’s expansion in the nation’s service sector in addition to Fed Chairman Powell’s dovish message contrasting his statement in December. The 3.3% rise in the German index may have been a short-lived elation with effective buyers leaving an overreaction to dovish remarks by Powell though fears of a global economic slowdown remain valid. Today, retail sales report are due from Germany and Eurozone and may have limited impact on the market as globally consequential Sino-US trade negotiations await.
Friday’s events were the trigger for the correction on the bearish DAX that allowed it to soar past the resistance level of 10710. It now faces a new key resistance zone of 10850-10896 which should further determine whether the DAX will rise with the upper Bollinger band while it holds above previous resistance of 10710 or move back down to support at 10630. 20-period MA struggles to cross over the 50-period moving average and on the daily chart the RSI reading remains below 50 as to confirm that we remain in negative territory.
Support: 10680 / 10548
Resistance: 10896 / 11027