DAX Index started the day lower, following the weak performance in Wall Street and Asian indices as investors turn cautious to recent developments in US-China trade talks and proceed with profit booking as the equities trade close to yearly high. President Donald Trump threatened to increase tariffs even further on Chinese products if a deal is not reached.
The Germany Producer Price Index (month over month) came in at -0.2%, below the forecasts of 0% in October, the yearly reading came in at -0.6% below the expectations of -0.4%. German economy returned to growth in the 3Q, with the GDP rising by 0.1%, quarter-on-quarter. In the 2Q quarter, the economy shrank by 0.2%.
Dax index momentum is still bullish despite the recent correction as the index holds above all major daily moving averages and the price hovers inside the ascending channel which started back in December 2018. Today’s correction exits the index from the overbought area as indicated in our daily chart by the RSI 14 which now moves to 58.65.
Traders expecting the index to find support at today’s low (13,110) while the ascending trendline crossing at 13,087 is a critical point and could provide some support. In case that the index slips below more sellers will join the action and might target the 50-day moving average at 12,675, a level that requires increased volumes to pierce.
On the other hand, resistance stands at 13,148 today’s high, a convincing move above that level might drive the Dax up to 13,368 the high from the end of January. A trade deal between the two superpowers might the catalyst for fresh yearly highs.More content