DAX 30: The Soft U.S. Markit PMI Service Should Keep Buyers at Bay
- As long as the DAX 30 trades below Tuesday’s high of 9534, it may reach the February 16 low of 9082 and the psychological level of 9000.
- Yesterday’s soft U.S. Markit PMI Service should discourage traders from trying to pick a bottom in the DAX 30.
- Today, Jobless Claims and Durable Goods Orders should set the tone.
The DAX 30 is firmly bearish below Tuesday’s high of 9534 and it appears that traders are using the current bounce to the February 19 low of 9319 as an opportunity to unload losing long positions and to turn bearish.
While price has corrected 38.2% of its latest downward leg (see chart below), it might correct up to 61.8% of its decline before price turns even lower. This makes the 9304 to 9414 interval a potential range for a reversal.
As long as the DAX 30 trades below Tuesday’s high of 9534, it may reach the February 16 low of 9082 and then the psychological level of 9000.
Yesterday, U.S. Markit PMI Service plummeted to 49.8 vs. a Bloomberg News poll projecting an outcome of 53.5. The weather has been blamed. However, the weak PMI Services reading was only one of many reports which have been on the soft side as of late. Earlier this week the Manufacturing PMIs from the U.S, E.U. and Japan failed to meet market consensus expectations. This should discourage traders from trying to pick a bottom in the DAX 30.
Today, Jobless Claims and Durable Goods Orders should set the tone and better than expected outcomes are needed to break the bearish trend. See our economic calendar for Bloomberg News consensus projections.
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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