European closing: DAX bleeds another long bodied red candlestick and fresh 2-year low

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  • European markets have been roiled by the Sino/US trade relations breaking down.
  • DAX has scope for a run to S3 at 10599 ahead of 10425 as the 2 Dec. 2016 low.
  • Bulls need to get back above the 50-D SMA at 11527 after a break of the 23.6% Fibo target at 11411.

European markets have been roiled by the Sino/US trade relations breaking down over the arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies, by the Canadian authorities. The U.S. futures selling was so intense at one stage that circuit breakers were triggered. 

Chinese authorities have reacted aggressively to the arrest, with the spokesperson of the Chinese Embassy in Canada demanding the release of the Huawei executive. What investor’s now fear, is a retaliation from Beijing beyond the realms of tariffs that could send the conflict spiralling out of control with dire implications for global economic growth.

Best and worst

Germany’s stocks had major losses in Pharmaceuticals & Healthcare, Insurance and Chemicals. The worst performers of the session were Daimler AG NA O.N. which dropped 6.28% or 3.140 points to trade at 46.860 while  Fresenius SE & Co KGAA O.N. (DE:FREG) fell 6.09% or 3.060 points to end at 47.220 and Covestro AG (DE:1COV) was crumbled 5.64% or 2.730 points to 45.710. The best performers of the session on the DAX were Vonovia SE (DE:VNAn), which added 1.28% or 0.53 points to trade at 42.08 at the close. Meanwhile, Adidas AG fell by just 1.48% or 2.90 points to end at 193.55 and Deutsche Lufthansa AG was down by 1.64% or 0.325 points to 19.490 in late trade.

DAX levels

The index is moving further lower in Bollinger bands and break of the recent lows of 10759 leaves scope for a run to S3 at 10599 ahead of 10425 as the 2 Dec. 2016 low. The weekly and daily ATR is now underscoring a defined downtrend with RSI barely in oversold territory, offering further room to go. Bulls need to get back above the 50-D SMA at 11527 after a break of the 23.6% Fibo target at 11411.

 

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