European Indices traded higher on Monday with the DAX index being the outperformer as it rose by 0.91%. The German blue-chip index is known to be sensitive to the global economic outlook which has since yesterday improved as comments from President Trump fueled hopes for a trade deal in November. Elsewhere, Brexit uncertainty persists as the UK parliament failed to vote on PM Johnson’s deal although a request for an extension suggests that a no deal Brexit may be averted in hopes of agreeing on a renewed deal with the EU. There are no major economic releases out of the Eurozone to impact price action today and direction will be left to EU corporate earnings results as well as Brexit and trade headlines.
The DAX reversed its mild losses from the previous two sessions as it gained 114 points to end at 12747 on Monday. The price held above the support tat 12600 and and treaded above the 20-period MA to breach the 12700 resistance level. Dax futures are pointing higher this morning and attempting to reach for the previous high at 12820 which guards the higher resistance levels at 12890 and 12950. However, the 4H RSI reading is hovering around the overbought territory while the daily RSI reading has nearly reached it suggesting that the index is in for a turn to the downside. Failure to reach and take out the 12820 level would lead the DAX lower with a sustained move below 12700 near the 20-period MA required to indicate selling pressure and target the lower support at 12600.
Resistance: 12820 /12890