DAX: German Manufacturing Orders Increases 3.9% MoM – Recession Fears Remain

The good news comes after the index’s worst day since June 2022. Yesterday’s global stock market rout takes the front seat.

The positive news of increasing economic activity in the manufacturing sector comes on a day where investors are still battling with recession fears. The news was better than most economists had expected.

The market consensus was for a small increase this month of 0.8% after last month’s increase of 1.7%. The added surprise lifted the market from yesterday’s close, but as we speak the DAX is now down 0.14% on the day.

The increase in manufacturing orders saw Germany’s key car industry do particularly well gaining 9.3% more orders. The sector with the highest expansion was transportation, with an increase in orders of 12%.

We saw the release of Construction PMI data for July. Analysts’ consensus had been for a decline to 38.6 from last month’s 39.7. We got another small but positive surprise as the number came in at 40.

The market has been volatile this morning as investors and traders battle with recession fears in the U.S. and positive economic data from Germany.

Technical View

The day chart below for the DAX shows a bearish trend with the market below the Ichimoku cloud. We also had a breakout of the head-and-shoulders pattern (yellow line) 3 sessions ago, which adds to the bearish signal from the Ichimoku system.

The break of this type of pattern is usually followed by a correction back towards the neckline (grey line) of the pattern. We may be on the pivot point with today’s candle. The RSI could close above 30, and today’s candle is enveloped by yesterday’s candle.

Both technical points indicate a possible reversal higher. However, the next resistance would be at 17,939 (green line), which corresponds to a previous dip.

ABOUT THE AUTHOR See More

Gino Bruno D'Alessio

Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.

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