European indices traded lower on Tuesday with the DAX posting the largest decline at the back of negative corporate updates. A profit warning issued by BASF dragged on the German blue-chip index as it cites weakness in German industrial production and raises concerns over the economic performance of the Eurozone’s largest economy. There are no major economic releases out of the US and Eurozone which should leave much of the influence on the DAX to Fed Chairman Powell’s two day testimony in which markets await to see whether the FED remains committed to cutting rates, as widely expected.
The DAX ended 0.85% lower at 12436 on Tuesday. The price dipped slightly below the ascending trend line to edge towards the 20-day MA around 12360 before trimming some of its losses. Look for a sustained move below 12400 to indicate selling pressure with a decline below the 12360 level to extend the pullback on the DAX towards the lower support at 12300. Meanwhile, failure to edge above the 20-period MA at 12500 would maintain the bearish bias and leave the DAX vulnerable to short-term weakness.