Germany’s Dax Index is testing an important trend line support. Furthermore, tomorrow’s US employment data could tip the balance either way.
Yesterday, the index closed at 15,531, down 159.55 (-1.02).
Tomorrow will be an important day for the index of 30 top german companies. The price has been in a consolidation pattern for the last 2 weeks. On June 14th, the Dax set a new all-time high at 15,802. However, within three days, it was close to 3% lower.
European indices for the most part have been following their uS counterparts higher. Despite a hawkish tone appearing at this month’s FOMC meeting, the markets have continueed their upward path.
Nonetheless, tomorrow we have the important non-farm payrolls data in the United States, which is expected to show 700k new entrants into the labour force.
Furthermore, the unemployment rate is predicted to drop to 5.7% and improve on last month’s 5.8% figure.
The Index has tracked back to a crucial level of support. So tomorrow’s data will play an important part in deciding if the German benchmark will continue its bullish trajectory.
DAX technical outlook
The daily chart shows that yesterday the Dax bounced from a significant trend line support at 15,450. In place from January, the trend has proven a good level of support for the last 5 months.
A break below the support would target 14,800, around 4.7% below the current price. Therefore, tomorrow could be an interesting day.
Of course, a disappointing dataset tomorrow may be interpreted as a bullish sign. Of late, the Fed has switched its focus from inflation to the labour force.
Any signs that employment growth is slowing could result in the Fed walking back their precious hawkish tone.
In the event of a positive market reaction, the Dax could target trend line resistance at 15,865 .
This would result in the latest of many new records set in 2021.
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Dax Index price chart (Daily)
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