Dax is down -0.21% on the Day

GER30, H1

European stock markets are heading south in cautious trade, after an equally cautious session in Asia. Dovish central bank comments out of Japan and the Eurozone coupled with robust services PMIs and a much stronger than expected German orders number failed to lift sentiment substantially. The ECB member Praet, said earlier  that a “substantial amount of monetary accommodation continues to be necessary”, describing “overall inflation developments” as having “remained subdued.”Meanwhile, comments from Trump on Asian trade weighed on sentiment as did ongoing concerns about China’s push for deleveraging, which saw the Hang Seng closing down -0.02%, but the CSI 300 managed to climb 0.71%, Nikkei and ASX closed little changed.

In Europe the GER30 is down -0.21% on the day, but still holding at very high levels above 13000. The UK100 outperformed slightly, despite a stronger Pound, but is also down -0.14%, while Spain’s IBEX underperformed, as did Spanish debt markets as the Catalonia crisis continues to linger. U.S. stock futures are little changed and oil prices are higher on the day with the front end USOil trading at USD 55.91 per barrel.

The GER30 clocked a low at 13446 on data, so far today, while it is in a consolidation mode since last Thursday. However, significant is the fact that the instrument despite the consolidation seen between 13440-13495, creates higher low fractal and higher up fractals within this consolidation period. This indicates that while Index is at the highest levels ever with small pull backs, there is still some upside momentum, even-though the technically looks overbought after the huge rally seen since September. The Daily RSI is at 80 and Stochastic at 95. Hence Index is likely to create new highs once we see a break above 13500.

Nevertheless, a possible weak behaviour on the price movement for GER30, could only be confirmed if it moves below 13404.00, which is a confluence of the 50.0 Fibonacci level and the Lowest fractals seen on Thursday. If it manage to break the 13404.00, the this suggest that index manage to cover downwards the 50 % of the movement seen since Nov 1, hence weakness is in place, with next support at 13255.60. 

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Andria Pichidi

Market Analyst


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