DAX What’s inside:
- DAX 30 continues to gain with resistance cleared
- Prior resistance looked to as support until upside objectives are achieved
- German employment data better/worse than expected
The DAX 30 continues to maintain above the 10000/100 vicinity, an area which has held importance for several months now. On Friday and Monday, the market was able to tack on further gains above a trend-line of minor importance off the November 2015 swing high.
The hurdling of these levels converts them from areas viewed resistance into areas we will look to as support on any decline which should unfold. The 10100/000 is most critical, but a back-side retest of the broken trend-line (~10200) will be eyed as the first spot to look for a higher low to develop.
If the recent trend of strengthening global risk appetite can continue, then a push towards our next levels of resistance is likely to unfold in the not-too-distant future. The April 21 peak at 10486 is the next level of contention, and just a short distance above there is the trend-line running off the April 2015 record highs, passing over the November 2015 swing higher mentioned earlier.
DAX 30 Daily
Unemployment data for May showed an increase of 11k, compared to a Bloomberg survey for a decline of 5k; prior was -16k. The unemployment rate ticked lower to 6.1%, below the 6.2% in April and analyst estimate. The unexpected rise in unemployment data sparked a reaction to the down-side in the DAX futures by about 40 points. Earlier in the morning, German retail sales rose 2.3% YoY in April, from 0.6% (revised from 0.7%) in March and higher than the 1.7% estimate. Month-over-month sales saw a decline of 0.9%, worse than the 0.9% growth expected, but higher than the decline of 1.4% (revised from -1.1%) seen in March.
For now, we will continue to give the benefit of the doubt to the upward trend as long as key support levels are not clearly violated. Buying dips above or into support once momentum has turned back higher is the preferred strategy at this time.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter @PaulRobinsonFX, or email him directly at probinson@fxcm.com.
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