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DAX 40 Slips Below Key 12000 Level, First Time in 21 Months

DAX 40 Slips Below Key 12000 Level, First Time in 21 Months

Zain Vawda, Analyst
  • The DAX Flirts with Key 12000 Psychological Level.
  • GfK German Consumer Confidence Prints New Record Low.
  • Geopolitical Tensions Around the Nord Stream Explosion Sees Energy Futures Surge.
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The DAX fell more than two percent in European trade as central bank speakers and rising bond yields weigh on global equities. Growing geopolitical tension in the region did little to help sentiment as Germany, Sweden and Denmark investigated the apparent sabotage of two key Nord Stream pipelines.

Earlier in the session, we had the forward-looking GfK German consumer confidence numbers which painted a rather grim picture. The print of -42.5 reflected a new record low as fears around energy and the continuing Central Bank hiking cycle intensifies.

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As the energy conflict with Russia heats up Natural Gas futures surged as much as 14%, posting gains for a second consecutive day. This comes on the back of the potential sabotage of two Nord Stream lines with the Kremlin stating they are unsure of the timing of repairs. Josep Borrell, the EU’s foreign policy chief, stated the damage to the pipelines appears deliberate and the Eurozone will take more steps to ensure the security of its energy facilities.

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In a week packed with central bank speakers, we heard from ECB President Christine Lagarde as well as policymakers Kazimir and Rehn who all echoed similar sentiments. The key takeaway being more rate hikes are coming with Kazimir stating 75bp is a good option for the upcoming ECB October meeting.

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As global Equities come under pressure the ever-worsening conditions and sentiment in Europe do not bode well for Europe’s most industrialized economy. The German economy remains at risk of recession as central banks continue to ramp up the fight against inflation with the DAX now down more than 20% from its yearly high, putting it firmly in bear market territory.

DAX 40 Daily Chart – September 28, 2022

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Source: TradingView

From a technical perspective, the index continues to print lower highs and lower lows. Price has just dipped below the 12000 key psychological level today for the first time in 21 months. A daily candle close below this level is required if the price is to push down any further.

The current price is some way below the 20, 50 and 100-SMA while a pullback to retest the MA’s cannot be ruled out as the RSI confirms that the index is now in oversold territory. It’s important to keep in mind the geopolitical developments that could influence any move from here with downside pressures remaining in abundance.

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Key intraday levels that are worth watching:

Support Areas

•11780

•11615

•11450

Resistance Areas

•12000

•12142

•12375

Germany 40 Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -13% 5% 1%
Weekly -12% -4% -6%
What does it mean for price action?
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Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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