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DAX: Heading Towards DB-induced Lows, NFPs Later Today

DAX: Heading Towards DB-induced Lows, NFPs Later Today

2016-11-04 08:35:00
Paul Robinson, Strategist

What’s inside:

  • The DAX breaks one level of support, on its way towards another
  • The next level of support is an important one, given the volatility surrounding it
  • US jobs report due out later today, presidential election on Tuesday

When we last looked at the DAX on Wednesday, we were taking note of the trend-line off the June lows and what a break of that sloping support would mean. We are now well below trend support, closing yesterday beneath our first noted level of price support at the 9/13 swing low of 10349.

The break below that pivot now turns it into short-term resistance, a recapture will be needed to gain any traction back to the upside. Looking further south we don’t have another significant level until the 9/30 Deutsche Bank-induced gap-and-trap low at 10190. Given how violently the gap lower was reversed on that day, this low in particular carries extra importance. On a first test it seems likely the market will try and muster a bounce.

The market is starting out on a weak note at the time of this writing, gapped lower towards the middle of the range between our new resistance at the 9/13 swing low and support at the key 9/30 low.

DAX: Daily

DAX: Heading Towards DB-induced Lows, NFPs Later Today

Created in Tradingview

Event alert: Later in today’s session the US monthly jobs report is due out. Analysts are looking for an NFP print of 175k, while the unemployment rate is expected to tick lower to 4.9% from 5%. The November FOMC meeting came and went this week with few surprises. There are two more NFP prints between now and the December meeting, and with over a 71% probability of a 25-bps hike priced in by the market via the Fed Fund futures (CME ‘FedWatch Tool’), it would likely require a very sizable miss to materially undermine those odds. Bottom line: It will take a sizable deviation in either direction, especially if a big miss, for markets to react violently. Either way, though, always expect the unexpected.

Also, keep in mind Tuesday is the U.S. presidential election, and with all the recent uncertainty added into the race markets may make some ‘funny moves’ next week.

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---Written by Paul Robinson, Market Analyst

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