The decision on Thursday night by President Trump to levy new tariffs on Chinese imports was not received well in financial markets. Especially, the China-sensitive German Dax index came under strong pressure.
5 August 2019 | SQUARED DIRECT – The DAX recorded its largest daily decline of the year as it fell by 3.11% on Friday in response to President Trump’s recent threat to impose new tariffs on China. In terms of data, Eurozone retail sales increased to 1.1% however failed to provide support for the German Index given its vulnerable position and sensitivity to global trade developments.
Looking ahead on the economic calendar, Germany and the Eurozone publish both service sector PMI and composite PMI data. The figures may have little influence on the day as concerns over escalating trade tensions dominate market sentiment.
German DAX index technical analysis
The DAX suffered a massive set-back as it lost 380 points to end at 11872; below the 12000 level for the first time since early June. The price broke through the support at 11900 and traders should now look to the 11700 level to provide support followed by the 200-day MA at 11650.
It is worth noting that the daily RSI reading has reached the oversold territory and the DAX may extend its losses towards the 11650 should 11700 fail as support and bearish momentum continue. Moreover, failure to trade above the resistance at 11900 should maintain selling pressure on the DAX.
Resistance: 11900 /12000
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