DAX: technical readings favor a downward continuation

By FXStreet European equities were hit by risk aversion and increasingly poor earnings reports in the Union. As companies complete their fourth quarter announcements, it is clear that European companies have experienced their worst earnings season since the financial crisis in 2008.

The German DAX fell 0.88% or 85 points, to close the day at 9.692.82, despite improved industrial production data.

DAX technical view

“The index, however, managed to recover from a daily low around 9,613, although technical readings favor a downward continuation, given that the daily indicators have extended their retracement from overbought territory and maintain sharp bearish slopes,” said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart, the technical picture also favors the downside, as the index has been contained by a mild bearish 20 SMA, currently around 9,750, whilst the technical indicators grind lower below their mid-lines, lacking momentum at the time being. A major support comes around the 9,570/80, where the pair has several daily highs and lows from earlier this year, and a break below it will likely signal a continued decline ahead of the ECB decision.”

Support levels: 9,648 9,575 9,510. Resistance levels: 9,752 9,837 9,924.
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Source:: FX Street