Tuesday, August 20, 2019



Fundamental Highlights

The DAX traded 1.32% higher on Monday as expectations of looser monetary policy from the ECB aids the risk on flows. Weak inflation data reinforced these expectations as the Eurozone CPI declines by 0.5% in July and came at 1% vs an annual estimate of 1.3%. Despite the ECB’s raised concerns over a contracting German economy, market participants were focused on the central bank’s readiness to counter the economic slowdown with stimulus measures. Additionally, China’s central bank announced its own plans to stimulate its economy. Nevertheless, risk appetite is unstable and market sentiment should remain cautious as news driven momentum drives price action on the DAX. Today, Germany publishes PPI data which is likely to have a muted impact on the DAX.

Technical Analysis

The DAX gained 152 points to end at 11715 on Monday. The price managed to trade above the 200-day MA at 11660 and tag the resistance at 11750. Should price overcome the resistance at 11750, it would target the 11850 level separating the DAX from a bullish view. Look for a sustained move below 11750 to lessen the chances of an advance towards 11850 and lead the Dow to turn lower towards the support at 11660 near the 200-day MA. Below this level the DAX should find support at the 11550 level near the 20-period MA.

Support: 11550/11490
Resistance: 11750 /11850

Chart (H4)