16 August, AtoZForex.com, Vilnius – Fundamentals force Germany’s DAX index to drift lower, however, as the price approaches a major technical support, chances of a rebound increase.
Fundamentally, although the prolonged Greece issue is seen to be finally over (until the third bailout funds will run out again), the DAX weekly index has suffered an awful case of disappointing Germany’s fundamental data. Last week’s German ZEW Economic Sentiment has drastically fallen for a fifth consecutive time, down from 29.7 to 25. Moreover, German Prelim GDP q/q depreciated below an estimated increase of 0.5% to 0.4%. To top it off, China has surprised the markets with a massive RMB devaluation, possible hindering future imports.
Now, investors hope the next week’s German Flash Manufacturing PMI release will bring the 30 companies index back on track.
Fundamentals to watch for next week:
- Friday’s German Flash Manufacturing PMI and German Flash Services PMI.
Technically, the index had failed to breach through 88.6% Fibonacci retracement level at 11660 and kept falling from the level since. Currently, the price rests on a combination of an upward slopping 200 day SMA and 23.6% Fibonacci level.
To short the index, a sell order could be placed at 10887 with an aim of 10800 as the first Take profit and a combination of Fibonacci Fan 50% and a custom 10% retracement level at approximately 10675 as the second. A stop loss at around 10945 can be used.
Alternatively, the DAX could be longed from 11160 to the first TP at 11260 and the second at 61.8% Fibonacci retracement level at 11355. A stop loss of approximately 67 pips could be placed.
Current pip count: +570