Dax index slumps in the open on Monday despite a coordinated central bank action targeting to restore the order in financial markets as investors globally continue to weigh the economic impact of the coronavirus. The Fed yesterday cut interest rates by 100 basis points to zero and also would buy back $700 million of Treasurys and mortgage-backed securities. Germany has closed large parts of the economy, and it borders as they increase the efforts to contain the coronavirus spread.
Deutsche Bank opened 9.82% lower, making new record lows at 4.63, while Lufthansa AG is 13.21% ower at 8.15 and MTU Aero Engines AG is 14.44% lower at 131.85.
Economic data from China shows a severe impact of the coronavirus outbreak in the economy as the Industrial output dropped 13.5%, and the retail sales plunged 20.5%.
Dax index has lost over 37% since the February highs in a historic correction wiping out all gains since the last recession in 2013.
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Dax Index Technical Outlook
Dax index is 7.63% lower at 8,512, as the sell-off in equities around the globe continues. The index has lost 37.45% in the last month and over 18% the last five trading days. The Dax outlook is clearly bearish and has reached a deeply oversold level. The RSI 14 is at 9.87 a level that we haven’t seen since the 2008 crisis.
On the downside, the initial support for Dax stands at 8,451 the daily low. In case the sell-off continues, the next support zone stands at 8,227 the low from September 9th 2013.
On the other hand, the initial resistance for Dax stands at 8,811 the daily high. A break above might test Friday’s high at 9,984. A credible close above might challenge 10,377 the low from March 11th trading session.
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