After moving up continuously for eight trading sessions DAX opened down this morning amid concerns that EU governments may imposed new sanctions on Russia. The index in yesterday’s trading session opened down and remained down throughout the day as there was considerable amount of selling pressure on rebound. Going forward the DAX index has strong support near 9,612.73 levels and for any further upside the index would need to close above 9,805 in near term for the rally to continue.
In the prevailing gloom encircled economic scenario of the extended Eurozone, which is still coming to terms with the sudden move by the European Central Bank to introduce rate cuts and a limited economic package last week, the German DAX was the only exception. When the week began on 8th September, the DAX made a spirited attempt to rise at the European stock market. This was in spite of the fiscal policy changes that were being brought in at the Eurozone level and the unravelling geo-political scenarios in Ukraine. The markets also indicated nervousness at the outcome of the next week referendum in Scotland whose citizens are going to decide if they want to cede from the United Kingdom and emerge as an independent nation.
In the current week, DAX has managed to overcome the above listed uncertainties to register a slim but physiologically important 0.1% increase to reach 9,758.03 points, which is just 3 percent shy from the record highs of 10,050.98 points, that the browser had registered earlier in June this year. To put the small 0.1% gains posted by DAX in context, we need to compare its performance with Euro STOXX 50 index which saw a 0.2 percent dip. Similarly the other big volume trader CAC of France was also down by 0.3 percent in the comparable period. The other looser was the UK’s FTSE 100 which has moved down by 0.3 percent during the same time period.
The strength shown by the DAX has been linked to the strong economic data released on Monday. The report indicated the German economy enjoying an “a record trade surplus of 22.2 billion Euros ($28.72 billion) in July” this year.
Sell DAX below 9,690 for target of 9,666, 9,635 with stoploss of 9,715.