Suddenly, the health of Germany’s economy, driving force of the 19-member Eurozone, is under question, just as the slowdown in emerging markets, including China, starts to take its toll. Plus the analysts are not yet clear how the Volkswagen scandal will affect the wider German economy, but it could have a considerable impact if it damages confidence in diesel cars generally.
German finance Minister stated last week that the German government expects its economy to grow by 1.8% in real terms this year and 2016, but weakness in emerging markets poses a risk to the outlook.
The Index rose more than 3.5% since the start of the month and increased 3.4% year to date plus it’s in a bearish phase since the beginning of October. Last week, DAX30 rallied with a wide range and closed in the green near the high of the week, managing to close above the weekly resistance. Stochastic is showing an oversold market setting higher lows and price is making lower lows, signs that the downside may begin to get exhausted.
Expecting an upward move to a key level at 10,522 on a break above previous week high at 10,146.5 (scenario 1) or a bounce off a key level at 10,522 may push downward the Index to a weekly resistance at 10,054 (scenario 2).
Ger30 is a CFD written over DAX30 futures.