The DAX ended 2.19% lower as the global growth outlook deteriorates after the German economy showed contraction in the second quarter while industrial production from China reached a new low. The data ramped up demand for safer assets and led to the inversion of the US yield curve which signals an upcoming economic slowdown. Moreover, The Eurozone’s Q2 GDP figure came in line with expectations at 0.2% however the region’s industrial production figure fell by 1.6%. There are no major economic releases out of the Eurozone today, thus the DAX may take directional cues from Wall Street as the US publishes retail sales and manufacturing data. Apart from the data, expect geopolitical and trade headlines to influence global sentiment.
The DAX posted a sharp loss of 257 points to end at 11492 on Wednesday. The price failed to trade above the 11800 level and dropped below the 20-period MA to find support at 11440. A decline below 11440 would target the lower support levels at 11340 and 11300. On the other hand, a move above 11550 would indicate buying pressure and lead to a test of the resistance at 11600 followed by the 200-day MA at 11660.
Resistance: 11550 /11660