European shares led by the stocks on the DAX index opened lower after yesterday’s FOMC decision, with tech stocks leading the drop. However, fortunes have reversed midway into the trading session, allowing the DAX index to stage a recovery. The DAX index remains 0.61% off the pace but has recovered a significant portion of its earlier losses.
The primary fundamental trigger for the DAX index comes up on Friday, 23 September, when a slew of Flash Manufacturing and Services PMI data from the Eurozone will hit the airwaves. The German Flash Manufacturing PMI is expected to have dropped from 49.1 to 48.3, while the market expects the German Flash Services PMI to drop from 47.7 to 47.2. There was a downward revision to both previous numbers.
From the technical analysis standpoint, the DAX Index remains under pressure. It is very close to retesting the 2022 lows seen on 5 July, and the progressively lower peaks of price action for 2022 point towards continued weak sentiment around the Eurozone economy and the German stock market. Will tomorrow’s economic data provide a basis for a renewed selloff or will the bulls be able to hold the 2022 support levels?
The 12625 support must stay intact if a recovery toward 12903 (23 June and 30 August lows) is to occur. A break of this upside barrier makes 13091 available (24 August low and 9 September high). 13383 is a recent harvest point for the bulls at which further upside stalled on 13 September 2022. If the bulls uncap this barrier and exceed the high of 13 September, 13652 (13 June and 19 August highs) becomes the new target.
On the other hand, failure to keep the penetration close above the 12625 support leads to the failure of this pivot. This scenario would lead to a decline that targets the 5 July low at 12398. A further decline brings 12033 (26 June 2020 and 27 October 2020 lows) into the picture as the new downside target. If there is further price deterioration, the 11713 support and the 26 March 2019 low at 11326 become the additional harvest points to the south.
This post was last modified on %s = human-readable time difference 16:58