DAX Continues Recovery Thanks to Touted Tariff Relief on Autos
German stock continue bullish momentum on automakers but the DAX remains in bearish territory.
- Trump suggests he may consider modifying auto tariffs
- VW, BMW, and Mercedes all up over 3%
- Technicals on day chart remain bearish for DAX
The DAX is up 1.36% this morning after gaining 1.28% in yesterday’s session. However, the trend remains bearish after dropping over 11% in the first week of April.
Trump Tariffs On & Off
Trump slapped 25% tariffs on automakers for imports from Canada and Mexico and caused a rout in German auto stocks.
All German auto manufacturers have plants in both countries that serve the US market.
The US President has now stated there might be some modifications to these tariffs. He said he might exempt the auto industry to allow time for manufacturers to adjust.
VW is up 3.91%, BMW 3.59%, and Mercedes 3.27% on the day. Auto parts maker Continental is also up over 3% on the day.
The relief might be temporary, as relocating whole plants from one country to another take considerable time. And it seems unlikely that Trump would allow an exemption to run that long.
DAX Live Chart
Technical View
The chart below for the DAX shows prices still below the Ichimoku cloud and in a clear bear trend.
The market correction that took place last week met with the resistance of the cloud, as I expected.
The next level of major resistance is at 21,600, which coincides with the bottom of the cloud. Above that, the next level of resistance would be the base of the consolidation area from the last rally at around 22,382 (green line).
That level of resistance also coincides with the top side of the cloud. To the downside, the first support level is at 20,531 (orange line), which coincides with a previous high.
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