Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
As the trading week kicks off, Ger40-Futures appear to be catching a breath after ending a five-day losing streak. Friday saw a modest gain, closing at 15,748, offering a subtle relief amid economic uncertainties, with the Monday session adding an extra 0.7% gain during the Asian session as risk sentiment improved.
Recessionary concerns in Germany have prompted the ECB to reassess its policy stance, with fears of a Eurozone slowdown looming ahead of the highly-anticipated European Central Bank’s (ECB) monetary policy decision on Thursday. German inflation figures, while slightly softening, continue to be a concern, adding complexity to the ECB’s policy deliberations.
In the broader market context, global economic conditions remain uncertain, with concerns about the Chinese economy and looming Fed rate decisions. The U.S. Federal Reserve’s stance remains uncertain, with Vice-Chair John Williams highlighting the importance of data in shaping future rate decisions.
Technical
In the Ger40 index’s 4-hour chart, the price currently sits at 15,824, showing signs of a rebound as bulls attempt to recover lost ground. The price has recently surpassed the 50-EMA (blue line) but still trades below the 100-EMA (red line) and 200-EMA (orange line), indicating some lingering bearish pressure. The 200-EMA remains above both the 50-EMA and 100-EMA, suggesting a longer-term bullish bias. The RSI is on the rise, currently at 53.14, with its RSI-based Moving Average (M.A.) at 42.34, indicating increasing bullish momentum.
Short-term trading opportunities may emerge towards the 61.20% Fibonacci retracement level at 15,885, a significant resistance point. Breaking above this level, especially with strong volume, could lead to further gains, targeting the 15,970 and 16,070 resistance levels.
However, if the price drops below the 50-EMA, short-term trading opportunities towards the 15,701 and 15,887 support levels could materialize.
Summary
As we move forward, key indicators such as Italian industrial production and U.S. inflation figures will play a pivotal role in shaping market sentiment. However, trading opportunities could exist towards the 15,970 and 16,070 resistance levels should the price action sustain a push above the golden ratio.
However, a break below the 50-EMA would leave the 23.60% Fibonacci retracement level-enforced 15,701 support level within the bears’ reach in the short term.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
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