DAX 30 to bounce at open, will it sustain?

The German benchmark, the DAX 30 index fell the most since mid-July and led the sell-off in the European markets a day before, after the shares of Germany’s biggest lender Deutsche Bank sank 7.5% on reports that the bank sought financial aid from the German government in its negotiations with the US Department of Justice (DOJ).

The DOJ this month proposed that the bank pay $14 billion to settle civil claims related to mortgage-backed securities.  The main benchmark, the DAX closed -2.2% to 10,393.71, for its biggest one day slump since June 27.

On Tuesday, the DAX is seen opening on a positive note, attempting a tepid-bounce after yesterday’s sell-off. The DAX index futures trade +0.60% around 10,440 levels, which points towards a firmer start today.

However, it remains to be seen whether the index can sustain the rebound as the sentiment may remain weighed by the Deutsche bank woes. While increased anxious ahead of the outcome of OPEC meeting in Algeria, is also likely to act as a drag on the markets.

DAX: Technical levels:

Carol Harmer, Founder at charmertradingacademy.com, noted, “You can see where we hit the support line at 10385 yesterday and we have bounced...Today that support line comes in at 10370....so we really must take care...If we cannot break above 10455/60 when Cash opens it will send another weak signal to the market and we should then see the sellers back in control driving the market lower.”

“Now if we fail to make any headway topside there is still this trendline of 10370 calling...A break below here makes Dax even more negative and we would then be looking at further weakness leading to 10270/50...This should hold initial attempt...but again be wary...I would cover shorts...but wait until we see it stabilise before going long.”