Piece written by Alexa Smith, Trive Financial Market Analyst  

The GER 40 Futures (EUREX: FDAX) trickled lower after quarter-on-quarter GDP in the Euro Area registered a mere 0.1% growth, aligning with the previous figure. Year-on-year GDP growth fell from 1.1% to 0.5%, falling below the forecasted 0.6%. However, positive data in Germany, France and Spain have given the index futures new life, placing the GER40 at a critical juncture. 

German inflation eased from 6.2% to 6.1% in August, aligning with forecasts. Increases in food and energy prices outpaced the overall inflation rate, contributing significantly to the sustained elevation of the inflation figure. Meanwhile, month-on-month Industrial Production in France registered growth of 0.8% in July, in stark contrast to the previous 0.9% drop. Industrial Production in Spain also soared past forecasts of -2% and registered a growth of -1.8%, increasing from -3.2% in June.  

Technical 

An ascending channel pattern formed on the 4H Chart but was swiftly rejected as the GER40 Futures fell below the channel’s lower boundary due to woeful GDP growth in the Euro Area. The 50-day moving average journeyed to convergence but might shy away in light of additional woeful macroeconomic data in Europe.  

If the 15781 resistance at the 23.60% Fibonacci Retracement holds, the Futures may attempt to retest the 15524 major support, which could mark a pivot point for a reversal. However, positive macroeconomic conditions in France and Spain could promote a leg up towards the 15940 resistance at the 38.20% Fibonacci Retracement and boost the index futures back within the channel. In this case, a move above the moving average lines could support the continuation of an uptrend.  

Summary 

The GER40 trickled lower on the backdrop of GDP growth concerns. However, positive data from Spain and France encouraged the index futures to tick and retest the 15781 resistance. If the 15781 resistance is broken down, the 15940 resistance could pave the way for an uptrend. However, the 15781 resistance could hold and promote a pullback towards the 15524 support.  

Sources: TradingView, CNBC 

This material is provided for informational purposes only and does not constitute financial, investment or other advice. No opinion contained in this material constitutes a recommendation by Trive Financial Services Malta Limited or its author as to any particular investment, transaction or investment strategy and should not be relied upon in making any investment decision. In particular, the information does not take into account the individual investment objectives or financial circumstances of the individual investor. Trive Financial Services Malta Limited shall not be liable for any loss, damage or injury arising from the use of this information. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with Trive Financial Services Malta Limited. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.