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DAX flies around as coalition talks breakdown


DAX futures (Dec 2017 contract is FDXZ7, continuation contract is FDXc1)

 

After coalition talks broke down in Germany over the weekend the DAX has opened strongly lower today, however will the weakness continue?

The interesting reaction as the market has developed in early trading is that the weakness has so far been bought into.

Politically the kneejerk reaction could be brief and already the market has bounced back by over 100 ticks.

However, an opening gap at 12,963 has been filled already and how the market closes today could be key.

The momentum has already been lower over the past couple of weeks and resistance mounting at 13,090 will not help the bulls.

This comes with the RSI and MACD already tracking lower, whilst intraday moves below 12,900 suggest straining support.

  • A close under 12,900 would now open the 50% Fibonacci retracement at 12,699.
  • If the market continues to trade below the Friday’s low at 12,963 this would also suggest downside pressure is in place.

Trading today could be difficult as rumours and newsflow will play a key factor.

Once the dust settles in the next couple of days the outlook should be clearer.


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