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DAX 30: Sells Off Into Heart of Support, Quick Recovery Needed by Bulls
DailyFX.com -
What’s inside
Awful NFPs hit DAX
Needs to quickly recover now that support has been probed
Until support breaks, it must be respected
The ECB on Thursday was not the concern for European indices last week, it was the U.S. jobs report on Friday, rather, which spurred volatility; the DAX was walloped alongside U.S. markets for 200 points on the worst NFP print in nearly six years. The jobs report showed the U.S. economy adding only 38k new jobs in May, well below the 160k analyst expected. Losses were furthered with a weak U.S. ISM Non-manufacturing PMI, which showed the services sector slowing further in May.
The resulting selling pressure sent the DAX into the heart of support between 10100 and 10000 to close slightly above the 10100 level we have been discussing frequently as of late. 10100 matters quite a bit, the 10k mark to a lesser degree.
The feeling on this end is that if we don’t see a recovery develop soon and the S&P 500 falls firmly below support at 2085 (not a view we hold right now), then we will need to shift our focus to the short-side. Trade below 10k exposes the trend-line off the Feb 11 low in the 9950 vicinity and a t-line off the 4/7 low near 9900. Below slope support an important area exists around the 9770/30 area, which consists of multiple bottoms created during May.
Support is still holding around 10100/000, though, so before we jump the gun with short positions we still must acknowledge the potential development of a higher low carving itself out. However, even with this possbility, when looking at major global markets, U.S. indices are still exhibiting the most strength and viewed as the best option at this time for trades from the long-side.
DAX (Ger30) Daily
2-hour
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX. If you have any questions or comments email him directly at probinson@fxcm.com.
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