GER30, H4
European stock markets rallied, following on from a broad move higher in Asia with positive reports from the likes of Alphabet, UBS and Apple supplier AMS, as well as Peugeot and Opel underpinning sentiment. The signs that China is shifting towards monetary expansion, as the government presented measures designed to boost domestic demand. This may add to worries that the trade war will turn into a currency war, but for now it has helped to put a fire under the stock markets and saw the CSI 300 closing up 1.59%, with the Seng up 1.44% at the close. Gains were more muted elsewhere, but Nikkei and Topix also managed to rise 0.51% and 0.47% respectively today.
In Europe the GER30 managed to outperform with a gain of 1.33% as of 10:36GMT, with a rebound in manufacturing PMIs and hopes that European Commission President Juncker’s meeting with Trump tomorrow may help to ease trade tensions adding to positive company news. The Euro Stoxx 50 is up 0.86% and the UK100 has managed a gain of 0.93% so far. US stock futures are also moving higher, oil prices are up from yesterday and the September WTI future is trading at USD 68.32 per barrel.
GER30 has reached a new high of 12,743.00 in July, after the strong break above the 50% recovery level from the June 15 drift and the 50-day SMA, at 12,685.00. The positive momentum picture in the medium-term and long-term outlook looks to be retained for a while as the asset creates higher lows since the bouncing off the 12,102.00 low, on July 2.
In the daily chart, the RSI is sloping to the upside at 56, while the MACD oscillator presents a neutral picture as it has reached zero zone from nearly 1-month negative performance. In the 4-hour chart however, momentum indicators remain on the bullish outlook.
If prices continues northwards, Resistance could come at a strong barrier on the 12,770.00 level, which is a breath below the 200-day SMA and coincides with the 61.8% Fib. level and yesterday’s highs. A move above this level could retest the 12,910-12,997.00 area. To the downside, a move below the immediate Support at the 50% Fib level at 12,640.00 could see prices touching the 12,492.40 Support at the 20-day MA. Any further losses could turn the overall picture from positive to negative.
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Andria Pichidi
Market Analyst
HotForex
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