Germany’s Dax Index Recovers, Closes +2.12% But Worries Remain

The Dax Index pared back much of Tuesday’s steep -2.5% decline. Recovering key technical levels to gain 314 points, finishing the day at 15,170.

So far this month, the ‘sell in May and go away’ mantra had worked well. At Tuesday’s close, the Dax Index had lost -2.33% in the first two trading days of the month. The tech sell-off in the US caused the index to break below the psychological 15,000 level for the first time since clearing it in late March.

With April’s performance wiped out, it appeared likely that the Dax Index would succumb to further selling as long-term trend line support was broken. Yesterday’s price action averted this immediate danger.

As I’m writing, German factory orders for March have been released and beaten estimates by a hefty margin. This is likely to provide further tailwinds for the Dax index in today’s session.

  • German factory orders (MoM) 3.0% vs expected 1.7%

Later we have the Eurozone Retails sales data for March, followed by ECB President Lagarde, who speaks today at 13:25 CET.

Dax Technical Outlook

The decline on Tuesday saw the Dax Index price slip below the 15,000 support of an ascending trend in place from the 11,458 low, set in October 2020. The break of this trend, on a closing basis, had the potential to trigger a deeper decline to the 100-Day Moving Average at 14,279. Just below the average lies the major support in the form of an ascending trend, in place from the April 2020 pandemic low of 8,400.

The price recovery signals that, for now, the long-term trend retains its bullish bias. The initial target on the upside is the 28th of April high at 15,355. Beyond that, the next focal point is the 19th of April all-time Dax index high of 15,501.

A close below 15,000 would suggest that momentum has once again turned lower and negate the bullish bias, putting previously mentioned support levels back in play.

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