Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

European stock markets, including the GER 40 Futures (EUREX: FDAX), faced a subdued start on Monday amidst the deepening conflict in the Middle East between Israel and Hamas. Geopolitical tensions and the potential for a prolonged regional conflict weighed on investor sentiment, causing a rush to safe-haven assets, driving oil prices higher while weighing on equities with the GER 40 Futures slumping over 1% on Monday.  

The conflict has triggered a flight to safe-haven assets, pushing bond and gold prices higher while propelling oil prices above $85 per barrel. This surge in oil, although benefiting energy stocks, raises concerns about inflation and its potential implications for global monetary policies. 

Defence stocks have rallied on the possibility of a prolonged regional conflict, whereas travel shares, including IAG, Air France KLM, and Lufthansa, face challenges due to rising fuel costs linked to soaring oil prices. 

Technical Analysis: 

The GER 40 Futures, currently at 15,238, are trading tentatively as the market responds to Middle East tensions. The 4H chart reveals that the index is currently below key moving averages, with the price action positioned below the downward-sloping 50-SMA (blue line) and the 100-SMA (red line). 

Notably, the downward-sloping 100-SMA trades above the downward-sloping 50-SMA. The Relative Strength Index (RSI) stands at 43.88, with a rising RSI-based Moving Average at 40.63, indicating potential for short-term bullish opportunities. 

Short-term trading opportunities could arise towards the 15,410 resistance level should the bullish momentum prevail. A break above this resistance could target the 15,514 level, followed by 15,538. 

However, a sustained push lower may offer short-term trading opportunities towards the initial support at 15,163, with the possibility of testing the 14,995 support level if breached. 

Summary: 

The GER 40 Futures face uncertain terrain as geopolitical developments unfold. Monitoring reactions to Middle East events and German industrial production data is key. Technical analysis suggests a range-bound scenario with resistance at 15,410 and support at 15,163, guiding traders through these challenging times. 

Short-term trading opportunities could arise if the price breaks above the 15,410 resistance level, targeting 15,514 and 15,538. Conversely, a sustained decline may lead to trading opportunities near the 15,163 support level, with potential testing of 14,995.  

Sources: TradingView, Trading Economics, Markit Economics, Reuters, Dow Jones Newswire.