Current trend

The leading index of the Frankfurt Stock Exchange DAX 40 is correcting at 15867.0 after the publication of weak macroeconomic statistics.

Inflation in Germany continues to remain stable and, according to the report for July, increased by only 0.3%, which led to a slowdown in the negative dynamics of the annual consumer price index to 6.2% from 6.4% earlier, which, however, is not enough for the European Central Bank (ECB) to revise the current monetary policy and make a pause in the cycle of interest rate increases.

Earlier, the financial report was published by the German chemical and pharmaceutical multinational corporation Bayer AG, reporting a decrease in revenue to 11.04B euros from 14.39B euros a quarter earlier, while earnings per share fell to 1.22 euros from 2.95 euros.

Today, inverters are awaiting data from Germany's largest energy company E.ON SE and, according to preliminary estimates, revenue may decrease to 24.05B euros from 33.54B euros, and earnings per share — to 0.2721 euros from 0.4000 euros earlier. The outlook for the financial performance of the German manufacturer of tires, automotive electronics and other components Continental AG is more positive: revenue is likely to reach 10.39B euros, and earnings per share may amount to 1.9 euros, which corresponds to 1.91 euros in the previous quarter.

The growth leaders in the index are Merck KGaA ( 1.19%), E.ON SE ( 1.05%), Beiersdorf AG ( 0.97%), RWE AG ( 0.52%).

Among the leaders of the decline are Deutsche Bank AG (-3.84%), Commerzbank AG (-3.34%) and Infineon Technologies AG (-3.23%).

Support and resistance

On the daily chart, the index is trading in an uptrend, approaching the support line of the global corridor with dynamic boundaries of 17900.0–15800.0.

Technical indicators reversed and issued a local sell signal: the fast EMAs on the alligator indicator again crossed the signal line from top to bottom, and the histogram of the AO oscillator moved into the sales zone, continuing to form descending bars.   

Support levels: 15700.0, 15200.0.

Resistance levels: 16000.0, 16300.0.

Trading tips

Short positions can be opened after the price consolidation below the local support level of 15700.0 with a target at 15200.0. Stop-loss – 16000.0. Implementation time: 7 days and more.

Long positions may be opened after the price consolidation above the local resistance level of 16000.0 with a target at 16300.0. Stop-loss – 15800.0.