Yesterday, the DAX (CFD: GER30) breached its April 20 low of 10,283 and price fell to 10,228. The breach to the April 20 low turned the very short-term trend bearish below Friday’s close price of 10,411.
The trend is bearish as Friday’s close price of 10,411 is a lower high in relation to the April 21 high of 10,488. In addition, yesterday’s low of 10,228 is a lower low in relation to the April 21 low of 10,338.
The slide to the DAX 30 got the wind in its sails as the German IFO Business Climate rose to 106.6 and thereby failed to match the Bloomberg News projection of a rise to 107.1. While the outcome of the IFO Business Climate failed to rise as much as expected, some economists see the move higher over the last two months as positive. The IFO Business Climate has hinted that German economic growth picked up slightly when it entered the 2Q
The IFO Business Expectations index, which tends to lead German GDP by 6 months, rose to 100.44 from 100, which economists say bodes well for German GDP over the next six months.
We estimate that there is a +0.79 correlation between German GDP YoY and the IFO Expectations index upon the IFO index having been adjusted to lag behind by two-quarters. We have used the last 20 years of quarterly results to calculate the relationship and below is a chart showing this relationship.
(Click on image to enlarge)
Resistance levels above Friday’s close price of 10,411 are the April 21 high of 10,490, followed by the January 3 closing level of 10,692, and the December 30 high of 10,880
Yesterday’s low of 10,228 is the nearest support level, followed by the April 14 high of 10,110 and the psychological level of 10,000.
DAX 30 | CFD: GER30
(Click on image to enlarge)
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