The German DAX dropped half a percent yesterday after the EU warned of slowing growth across the eurozone. The index may open lower today as well, with worries about a slowdown in China and concerns over Italy's budget deficit likely to keep investors cautious, heading into the weekend. Italian budget concerns are back after the Italian government insisted it would stick with its plan to rapidly increase public spending.
DAX breaks below Wednesday's low as the bears were in full control moving the market lower throughout the whole session. Moreover, in spite of a strong opening the index closed below the previous day's open and close, forming a bearish Engulfing Candle. We are, however, trading close to the 200-period MA at 11,425 which will provide some kind of support. Selling might speed up should prices move below that 200-MA where further stops could get activated. The market looks oversold as indicated by the hourly RSI.
Support: 11425/ 11055
Resistance: 11666 / 11820