DAX Crashes 9-Month Range Floor as Russia, Ukraine Crisis Deepens

[MongiIG]

DAX 40, RUSSIA, UKRAINE, TECHNICAL ANALYSIS – TALKING POINTS:

• German DAX 40 stock index crashes through 9-month range floor
• Selloff appears driven by fears of deepening Russia, Ukraine crisis
• Positive RSI divergence hints at pause before downside extension

 

Germany’s DAX 40 stock index punched through long-standing range support in the 14795-15046 zone, flagging what may be significant bearish escalation. The move appears to be driven by increasing angst surrounding tensions at the border between Russia and Ukraine.

The mood had been relatively upbeat at the weekly trading open as China weighed in against military action but optimism fizzled. Russian President Vladimir Putin formally recognized the independence of breakaway republics Donetsk and Luhansk in eastern Ukraine and signed a treaty of cooperation with them.

That set the stage for Russia to send troops into the contested area, in what the Kremlin called a “peacekeeping” mission. The move was promptly condemned by the European Union and the US, foreshadowing a response and setting the stage for continued instability in the region.

DAX 40 daily chart created with TradingView

Sellers are testing minor support at 14406, with break below that exposing a former resistance zone now recast as support anchored at 14123. Positive RSI divergence hints that a period of digestion or perhaps even a bounce may be in the cards, however.

Any rebound from here probably needs to manage a daily close back above 15046 if selling pressure is to be neutralized in earnest. From there, overcoming the series of lower lows defined by a falling trend line set from early January could perhaps establish a genuinely constructive tone.

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--- Written by Ilya Spivak, Head of Greater Asia at DailyFX.com. 22nd Feb 2022