Markets found some relief following a rescue operation by the Swiss National Bank, which granted Credit Suisse a $54B lifeline. On the other side of the Atlantic, large U.S. Banks grouped and committed $30B to First Republic Bank, another bank starting to crack.  

The markets reacted positively, and the DAX40 Futures (EUREX: FDAX) gained 2.58% from Thursday’s lows. Next week holds the highly anticipated U.S. interest rate decision, which traders currently expect a 25 basis point rate hike. The European Central Bank (ECB) stuck with a 50 basis point rate hike and extended its commitment to fighting off inflation which they claim is projected to “stay too high for too long”.  

Technical 

The DAX40 Futures plunged into a sharp downturn represented by a descending channel pattern. Support and resistance were established at the 14721 and 15266 levels, respectively.  

Following a rejection of support, price action jolted towards resistance at the 15266 level. If bullish traders commit to their recovery process, a high-volume breakout above resistance could validate a sustained move to the upside. The 15467 level will likely be earmarked as a level of interest in a bull case.  

Alternatively, if bears look to respect resistance, a rejection could play out with the 14721 level set as a probable target.  

Summary 

With the ECB committed to bringing down inflation, further rate hikes are probable. More rate hikes could weigh down on equity valuations as borrowing costs expand while threats of a slowdown in economic activity arise.   

Source: Reuters, TradingView