Monday, July 1, 2019

DAX30 - 01 July 2019


Fundamental Highlights

The DAX surged by 1.04% on Friday as it reflected markets’ confident expectations over the G-20 summit which were later validated over the weekend. The US and China agreed to a trade truce as they resume trade talks with no plans to impose further tariffs. Moreover, President Trump allowed US companies to conduct business with Chinese telecom Huawei which is seen as a significant concession. On economic data, the Eurozone’s annual rate of inflation remained stable at 1.2% and below the ECB target of 2%. Today, Germany and the Eurozone publish unemployment data and manufacturing PMI figures, which are expected to impact price action during the day while improved sentiment towards US-China trade relations should buoy the DAX’s gains.

Technical Analysis

The DAX posted strong gains on Friday as it traded through resistance at 12330 and ended at 12398. Futures are pointing higher this morning as price overcame May’s high around 12450 and is attempting to break through resistance at 12600 followed by 12670. Meanwhile, the RSI reading is sitting in the overbought territory since Friday’s rally, however bullish momentum may buoy gains above the 12500 level before we see an eventual pullback. We will look for the DAX to exit the overbought territory and decline below the 12450 level to indicate further declines. Meanwhile we can expect the DAX which is sensitive to world trade developments to see risk appetite find strong support on the news of renewed US-China trade talks.

Support: 12500/12450
Resistance: 12600/12670

Chart (H4)