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DAX 30 Ignores Sharp Drop In China CSI 300 Index
DailyFX.com -
The DAX 30, in line with the FTSE 100, has so far shrugged off today’s major decline in the China CSI 300 index (-6.02%), and yesterday’s soft Dallas Fed Manufacturing Index.
From a technical point of view, the DAX has given back nearly 50% of last week’s gains, and today’s pullback is an opportunity to buy a dip if we assume that last week’s ECB infused rally is to hold.
However, I fear that with the U.S. open today, the DAX 30 may trade to lower levels. The China CSI 300 plunged below its August low and opens the door for a decline of an additional 15% before support from November 2014 potentially meets its price. Meanwhile, the Dallas Fed Manufacturing Index takes the sharpest plunge in 11 years (to -34.6 from -20.1) and at the onset of the 2008 recession was at -22.3.
With this in mind, it seems fair to wait for a short-term bullish trend to emerge. Right now a break tolast week’s high of 9844 is needed (or the next swing high, which still needs to be created between today’s price and last week’s high).
Data which may discourage bearish traders is today’s U.S. Markit PMI Services. Markets expect an outcome of 54 from 54.3 (Bloomberg News), and a higher than expected reading may suggest the U.S. economy is doing ok for now despite an evident slowdown in the manufacturing sector.
Other data segments on tap today are: U.S. house prices, Consumer confidence and Richmond Fed data. See our economic calendar
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DAX 30 | FXCM: GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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