Friday, August 16, 2019



Fundamental Highlights

The DAX ended 0.70% lower on Thursday as market sentiment was weighed down by rising trade tensions. China threatened to take retaliatory measures against the US’s latest round of pending tariffs. This alongside an abrupt apprehension over a deteriorating global growth outlook prompted by a yield curve inversion in the US and a contracting German and British economy has given market participants a reason to stay cautious. Today, the Eurozone publishes trade balance data for June and the US publishes housing data. Expect the DAX to take directional cues from Wall Street and any trade headlines to influence sentiment.

Technical Analysis

The DAX extended its decline to reach an intra-day low of 11263 before paring losses to end 80 points lower at 11412. The daily chart shows price formed a lower low while the RSI reading formed a higher low suggesting that the downtrend may be weakening. Moreover, a spinning top candlestick on the daily chart indicates indecision and that the bears may be losing their power. It is worth noting that until we see a trade above the resistance at 11850, the bearish outlook holds. Failure to trade above the 11550 level would maintain selling pressure while a break below the 11263 low would signal a bearish continuation. Alternately, trading above 11550 would indicate buying pressure and target the resistance at 11660 near the 200-day MA.

Support: 11420/11263
Resistance: 11550 /11660

Chart (4H)