Dax index slumps in early trading after a weak Asian trading session as investors worry about the coronavirus outbreak impact. The Wall Street futures are 3.89% lower.
Traders are trying to assess if the monetary and fiscal measures are enough to calm the markets. As the countries closing their borders across Europe, more companies will go bankrupt while others will lay off hundreds of thousands of staff.
Italy, Belgium, France, and Spain banned the short-selling of the EU’s largest companies, while Germany and the UK leave the markets free from restriction.
Germany’s ZEW Current Conditions Index dropped to -43.1 from -15.7 while the Economic Sentiment Index slumped from 8.7 to -49.5.
Dax index is 73648 lower at 8,621, as the sell-off in stocks return after yesterdays break. The index is trading in a deeply oversold level as indicated by the RSI (14) at 13.65 a level that we haven’t seen since the financial crisis in 2008. The Dax technical picture is bearish, and lower levels might be on the cards.
On the downside, the first support for Dax stands at 8,515 the daily low. In case the sell-off continues, the next support zone stands at 8,253 the low from Monday’s trading session. We have to go back to 2013 to find the next support at 8,227 the low from September 9th 2013.
On the other side, the first resistance for Dax stands at 8,633 the daily top. A break above would test yesterday’s high at 9,161. The next supply zone stands at 9,982 the high from March 13th trading session.