The Dax, likes its European peers has started the week on the back foot. Coronaviris fears continue to dampen demand for riskier assets, as the number of infected hits 40,000 and as the death toll surpasses that of SARS. The rapid spread of the virus, which shows no signs of slowing down, is raising concerns over the growth of the world’s second largest economy.
After losing 0.5% on Friday the Dax is extending those losses on Monday, trading down a further 0.2%. Stronger than forecast Chinese inflation data has helped to limit the sell off at the start of the week. Meanwhile eurozone sentix investor confidence figures dropped to 5.2 in February down from 7.6 the previous month and short of the 5.9 forecast, dampening the mood.
On the Dax Daimler was a rare advancer, gaining 0.6% amid plans to cut 15,000 jobs in a bid to reduce costs.
Levels to watch:
Dax is trading down 0.2%, although it remains above its 50, 100 and 200 sma on the 4 hour chart. Failure last week to break meaningfully 13600 has seen the Dax back in its sideways pattern that it has traded in since the end of 2019.
Immediate resistance can be seen at 13551 (7th Feb high) prior to 13606 (high 6th Feb). We would be looking for a meaning break above 13606 for the Dax to make an attack on its all-time high of 13640.
Immediate support is at today's low of 13445, prior to the 50 sma at 13375, closely followed by 100 sma at 13351. A breakthrough here could see the bears back in control, heading towards 13133.
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