GER30 Topped out on Tuesday

GER30, Daily          

German production data much stronger than expected, with overall production rising 2.2% m/m in February. We had expected the slump in orders inflow at the start of the year to still weigh on February produciton trends, but it seems at factory level, the fluctuations in orders over the first two months were levelled out and January production was revised down slightly, which left the monthly growth rate in February unchanged from January. A spike in production was a key reason, with the 13.6% m/m jump in construction production helping to compensate for the slow down in manufacturing to 0.9% m/m from 2.7% m/m. The two strong months of growth set the economy up for a stronger than anticipated Q1 GDP number especially as the later timing of Easter this year means manufacturing and construction will be less impacted by the Easter holidays as they were in 2016, which should help to keep March annual rate underpinned.

The better than expected data has dented the start of our SHORT position on the GER30 which we took on last nights close and were filled at 12174. Target 1 is 100 points, (12074)as it is against the higher time term trend (Weekly and Monthly remain positive) and 14 DATR is 120. The latest fractal high and pivot high was on Tuesday (April 4) at 12390. The RSI (59) is beginning to fall, 3 of the 4 times the BB upper limited was  exceeded since January the pull back has been beyond the 20 DMA. I have a half position size on this relatively high risk position a breach and break of the 20 DMA and I will add to the position. Target 2 is the the psychological support area and key round number 12000.

RISK : 20 DMA not yet breached and support at 12,100 and 12,000. Parabolic SAR still positive and Williams% has not broken 50. A breach of the Fractal high will negate this position.

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Stuart Cowell

Senior Market Analyst


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