DAX Index Could Resume Uptrend on US Markit PMI Beat
At the time of writing, the DAX index was up by 0.55% on the day, as stock markets worldwide were trading higher. The move itself is not enough to trigger the resumption of the bullish trend in the DAX index, but it could be the start of it. In the afternoon, US PMI figures will be out, and if they beat expectations, it might be enough to lift the DAX index higher.
The biggest loser with the highest amount of shares trading was Daimler, and its share price was down by 1.35%, with 1.35 million shares traded. Wirecard AG was up by 3.47% with 1.25 million shares traded, while Bayer was up by 3% and 1.79 million shares traded.
Bayer is a pharmaceutical company, and this sector has seen significant gains following the breakout of the Coronavirus in China, however, in the case of Bayer, the stock is up as Reuters reported that the company looks to has settled over the allegations that its weed removal product, Roundup, triggers cancer.
As for the DAX index, the price remains firmly trapped between the January 14 low of 13360, and the January 22 high of 13643.2, and the price will need to leave this range behind to start trending. Given that the longer-term trend is bullish, I anticipate the DAX 30 to breakout higher. However, if the price slides below the January low 13360, the short-term trend would turn bearish.
The reason for being long-term bullish is that the price has been trading higher since October, and from November 8 to January 9, the price settled in the large 12872 – 13428 range, which is a classic rectangle chart pattern. When the price traded above the upper end of the range on January 9, the pattern was triggered and it has a price target of 13999. The pattern will remain in play as long as the price trades above the January 14 low.
Potential market movers in the afternoon session are the US Markit PMI figures. The US Manufacturing sector PMI is anticipated to rise to 52.5 from 52.4, while the Services PMI is anticipated to rise to 52.9 from 52.8. If the indices managed to beat expectations it might be what is needed for the DAX index to take out the January 22 high of 13643.