Thursday, October 10, 2019



Fundamental Highlights

European markets traded higher on Wednesday as US-China trade hopes were in the air and managed to overshadow Brexit’s bleak outlook. Reports claimed that China is open to a partial trade deal despite the US’s latest series of actions which undermines the prospect of productive progress in today’s trade negotiations. With that being said, it only makes sense that China aims for an alleviation of tensions and seek limits on US tariffs as reported by news. Separately on economic data, today Germany showed its exports for August decline by 1.8% while its trade surplus narrowed to 18.1billion. The nation’s economic data continues to prove that the US-China trade war burdens the export-dependent economy. While the figures disappoint, the main influence on the DAX’s direction will depend on US-China trade developments as negotiations begin today.

Technical Analysis

The DAX traded 1.04% higher as it gained 124 points to end at 12094 on Wednesday. The Index managed to erase losses from the previous session as it bounced off the support at 11970 and recorded an intra-day high of 12176 yet remained below the 50-period MA which is currently at 12110. Today, look for a sustained move above 12110 to indicate buying pressure while taking out yesterday’s high would be required to signal further gains. It appears that the DAX has continued its sequence of higher lows and highs however the resistance provided by the 50-period MA will determine whether price can continue its short-term uptrend. Failure to trade above 12110 will lead to a turn lower with a trade below 11970 required to target the low at 11914. A break below 11914 would break the sequence of higher lows and signal further weakness.

Support: 11914/11820
Resistance: 12110 /12176

Chart (H4)