Friday, May 31, 2019

DAX30 - 31 May 2019


Fundamental Highlights

The DAX index rose 0.54% on Thursday as the trade front paused which enabled the German blue-chip index known to be vulnerable to world trade developments to take a breather. The German economy’s dependence on trade relations with China implies its reliance on the strength of the Chinese economy which delivered a contractionary manufacturing PMI report this morning and in turn may weigh on the DAX. Meanwhile data out of Germany provides no relief as it reveals retail sales figures declined by 2% and should prove to be another barrier on the Index’s attempt to move higher. On trade news, President Trump reportedly intends to impose tariffs on Mexico which would aggravate the US’s global trade relations and the global growth outlook. Traders should continue monitoring trade headlines to lead direction while markets maintain risk off sentiment.

Technical Analysis

The DAX recovered off of its low at 11837 to tag the resistance at 11920 before ending at 11902. The Index failed to breach the 11920 level which is currently coinciding with the 20-period MA acting as dynamic resistance on the DAX. The DAX is currently trading below the crucial support of 11800 as it broke through the rising trend line support, signaling a wider bearish development. Holding below the 11800 level would signal selling pressure while a trade through 11750 would target the lower support level at 11690. Moreover, as the RSI reading approached the oversold territory, there is potential that price finds support at 11750 and turns higher unless bearish momentum picks up.

Support: 11750/11690
Resistance: 11850/11920

Chart (H4)