The DAX posted a sharp loss of 1.52% as China announced its retaliation against rising US tariff rates on Monday. The latest move prolongs the Sino-US trade conflict as it threatens the reported progress the two nations have made in order to reach what now seems to be a far-fetched trade deal. Today Germany and the Eurozone publish Zew economic sentiment figures which may impact price action during the day as it provides insight on the region’s economic outlook. However, given that a major key to the DAX’s performance lies in the global outlook, trade pessimism would limit upside support the data may provide.
The DAX failed to hold above 11970 and fell below the 50-day MA to reach support at 11850 before ending at 11876 on Monday. Below 11850, potential areas of support can be found at 11800 followed by 11750. Should the index edge and hold above the 11970 level , look for a trade above the 12,000 level to target resistance at 12030. However a sustained move below 11970 maintains selling pressure with a trade below 11850 required to extend the pullback and signal a bearish outlook on the DAX.
Resistance: 11970 /12030