It was another very negative Asian session for equity markets, and stocks crashed all over the world, with the German DAX index losing 1.45 per cent shortly after the futures opened for trading in the morning. It was trading at around 11,370 EUR, which are levels last seen in December 2016.
DAX dropped to fresh cycle lows and confirmed the bearish bias. The first resistance is now located at previous lows in the 11,430 - 11,450 EUR region and as long as the index remains below, the immediate outlook seems bearish.
The next resistance could lie at another broken support at 11,500 EUR and if DAX manages to jump beyond, it could send the index to the bearish trend line at 11,550 EUR. These are the three main levels DAX needs to overcome in order to cancel the current downward trend.
On the downside, it is difficult to look for supports as DAX hasn't been on these levels for quite a while. Therefore, the first support could be near 11,300 EUR and then at 11,320 EUR, where a small consolidation occurred in the middle of December 2016.
It would appear that EU stocks could correct even lower over the next couple of days, so the outlook still seems negative.
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