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DAX Futures Point to a Bearish Open with Business Sentiment in Focus

By:
Bob Mason
Updated: Apr 24, 2023, 09:23 UTC

It will be a testy start to the week for the DAX. German economic indicators and ECB chatter will need to be market friendly at the start of a busy week.

DAX Tech and Fundamental Analysis - FX Empire

In this article:

It was a bullish end to a bullish week for the DAX. The DAX rose by 0.54% to end the week up 0.47% to 15,882. Significantly, the DAX revisited the 15,900 handle for the fourth time in five sessions.

Corporate earnings and economic indicators delivered direction on Friday. SAP (SAP) led the way, rallying 5.24% on better-than-estimated quarterly revenue numbers. However, manufacturing PMI numbers from Germany weighed.

Later in the session, better-than-expected US private sector PMI supported a bullish end to the session.

Ahead of a busy week on the earnings calendar, the NASDAQ Composite Index rose by 0.11%, with the Dow and S&P 500 seeing gains of 0.09% and 0.07%, respectively.

Private Sector PMIs Deliver a Choppy Session

Euro area economic indicators sent mixed signals. The German manufacturing sector contracted at a more marked rate in April. According to prelim figures, the manufacturing PMI fell from 44.7 to 44.0. However, a pickup in service sector activity cushioned the impact, with the Services PMI rising from 53.7 to 55.7.

Later in the day, US private sector PMIs delivered support. The all-important services PMI rose from 52.6 to 53.7, with the manufacturing PMI up from 49.2 to 50.4. The PMI numbers contrasted with the Thursday stats that reignited recessionary fears.

However, there was no breakout in response to the US PMIs, with the uptick in private sector activity supporting a more hawkish Fed interest rate decision.

According to the FedWatchTool, the probability of a 25-basis point May interest rate hike rose from 84.5% to 89.1% versus 78.0% one week ago.

The Market Movers

It was a mixed Friday for the auto sector. Mercedes-Benz Group and Porsche led the way, rising by 1.44% and 1.20%, respectively. Volkswagen and BMW saw more modest gains of 0.26% and 0.58%, respectively, while Continental fell by 0.97%.

It was a bearish session for the banks. Commerzbank and Deutsche Bank fell by 0.47% and 0.18%, respectively.

The Day Ahead for the DAX

It is a relatively busy day ahead on the economic calendar.

German Ifo Business Climate Index numbers for April will be in focus. A better-than-expected headline number would support a bullish start to the week.

However, investors should also consider ECB commentary. ECB Executive Board member Fabio Panetta speaks today.

It is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider, leaving corporate earnings to influence.

Coca-Cola (COKE) will release earnings results on Monday ahead of some big.

DAX Technical Indicators

Resistance & Support Levels

R1 15,952 S1 15,759
R2 16,023 S2 15,637
R3 16,216 S3 15,444

The DAX has to avoid the 15,830 pivot to target the First Major Resistance Level (R1) at 15,952. A move through the Friday high of 15,900 would send a bullish signal. However, the DAX would need German business sentiment figures and central bank commentary to support a pre-US session breakout.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $16,023. The Third Major Resistance Level (R3) sits at 16,216.

A fall through the pivot would bring the First Major Support Level (S1) at 15,759 into play. However, barring a flight to safety, the DAX should avoid sub-$15,700 and the Second Major Support Level (S2) at 15,637. The Third Major Support Level (S3) sits at 15,444.

DAX resistance levels in play above the pivot.
DAX 220423 Hourly Chart

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The DAX sits above the 50-day EMA (15,392). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA (15,392) would support a breakout from R1 (15,952) to give the bulls a run at R2 (16,023). However, a risk-off event would deliver a fall through S1 (15,759) to bring S2 (15,637) into view. A fall through the 50-day (15,392) would signal a near-term bullish trend reversal.

EMAs are bullish.
DAX 220423 4 Hourly Chart

The DAX Sees Red

Looking at the futures markets, DAX was down 11 points, with the NASDAQ mini falling by 39.75. The Dow mini was down by 115.

For a look at the economic events, check out our economic calendar.

 

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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