Thursday, July 18, 2019

DAX30 - 18 July 2019


Fundamental Highlights

The German blue-chip index known to be vulnerable to global trade developments was dragged 0.72% lower as trade headlines reignite trade concerns. President Trump’s remarks on tariffs against China was followed by a Wall Street journal report stating that the two nations have reached a halt in negotiations with the unwelcomed restrictions on Huawei standing in the way of China’s cooperation. Separately on economic data, the Eurozone’s inflation picked up in June,however remains below the ECB target of 2% thereby maintaining market expectations of looser monetary policy. Today there are no major economic releases out of the Eurozone and the DAX should be influenced by earnings reports and US-China trade headlines. Moreover, The DAX may take directional cues from Wall Street as the US publishes its Phil Fed manufacturing index.

Technical Analysis

The DAX dropped by 84 points to end at 12341 on Wednesday. The price failed to trade above the 12440 level and met the 50-period MA with resistance as it declined towards the support at 12300. Yesterday’s drop indicates that the short-term higher moves were to form a lower high on a potential trend reversal. Futures are pointing lower this morning as price broke below the support at 12300 and the RSI reading has reached the oversold territory. To confirm whether further downside pressure is in store for the DAX, we will look to the 50-day MA around 12200 as a test of support. Failure to hold above 12200 would lead the DAX towards lower levels at 12165 followed by 12130.

Support: 1220/12165
Resistance: 12300/12370

Chart (H4)