Dax index started the trading session lower after the four-day rally that drove Dax close to all-time highs. Profit-taking and weaker Germany Industrial production weigh on the index. The coronavirus outbreak also is significant uncertainty for the markets despite the PBOC intervention. China announced yesterday that it would halve tariffs on some $75 billion of imports from the USA starting February 14th.
Dismal economic data continue to hit the biggest European economy. Today the Germany Industrial Production also was a big miss. The December reading came in at -3.5% below the forecasts of -0.2%. The yearly reading for Germany Industrial Production also was a big miss, as it came in at -6.8% below the estimates of -4%.
Yesterday the Factory orders in Germany dropped by 2.1% in December compared to November amid a sharp drop in demand from other nations in the EU. The reduction in December came after a 0.8% decline in November and a slight increase of 0.2% in October.
Dax index is 0.67% higher at 13484 with the positive momentum intact despite today’s pullback and the weaker economic data. Central banks liquidity drives the global rally in stocks and other risky assets. On the technical side the momentum is bullsi as long as the index trades above the 50-day moving average.
On the downside, the initial support for Dax will be me at 13474 the daily low. A close below might open the way for the next support level at 13294 the 50-day moving average. If ther bears break that level next support stands at 13131 the low from February 4th session.
On the flip side, the first resistance for Dax index stands at 13,551 today’s top. Yesterday’s high at 13606 is the next resistance area. While bulls need to break above 13640.06 the all-time highs in order to initiate another leg higher.