Thursday, October 3, 2019



Fundamental Highlights

European markets traded sharply lower on Wednesday as the US announced its intentions to impose tariffs as high as 25% on EU imports while fears over a world economic slowdown persisted following disappointing global manufacturing data from the previous day. Moreover, the US’s weaker than expected ADP employment data weighed on the day and further tainted the global economic outlook. We have yet to see whether today’s services and composite PMI data out of the Eurozone and Germany should do the same as it would maintain bearish pressure. In addition, the US publishes its non-manufacturing PMI figure alongside factory orders which are likely to influence direction on the day. Apart from the data, trade developments should be monitored alongside Brexit updates as markets will tune in to how the EU will receive PM Boris Johnson’s newly proposed Brexit plan.

Technical Analysis

The DAX traded 2.76% lower on Wednesday to end at 11925, thereby amounting to a loss over 500 points over the course of 2 days. The index dropped below the 12230 level to reach the support at 11900 as bearish momentum accelerated declines. Look to the 200-day MA near 11800 to provide the DAX with support should price decline below the 11900 level. However, should bearish momentum stall as the 4H RSI reading indicates oversold conditions, then look for a sustained move above 11960 to indicate buying pressure and a potential rebound where resistance can be found at 12000 near the 50-day MA followed by 12080.

Support: 11800/11685
Resistance: 12000 /12080

Chart (H4)