The Ger 40 Futures (EUREX: FDAX) have been on a remarkable upward trajectory, notching gains for five consecutive weeks, with a notable week-to-date increase of 37 basis points hinting at a potential sixth week of gains.
This upward momentum finds its roots in a series of encouraging economic indicators. German producer prices, declining by 4.1% year-on-year in February, signalled potential relief from inflationary pressures. Additionally, the German ZEW Economic Sentiment Index soared to a two-year high in March, indicating robust investor morale amidst improving economic conditions.
The optimism surrounding the Ger 40 Futures is further fuelled by speculation of a forthcoming rate cut by the European Central Bank as signs of easing inflation emerge. However, amidst these buoyant sentiments, all eyes remain fixed on the Federal Reserve Interest Rate Decision. While expectations lean towards unchanged interest rates for the fifth consecutive time, traders eagerly anticipate insights from the FOMC’s economic projections and Fed Press Conference, seeking clues regarding future rate adjustments.
Technical
The Ger 40 Futures are navigating a steadfast uptrend, rising within an ascending channel pattern and maintaining a position above the 100-day moving average. A significant gap up further bolstered bullish sentiment, propelling the index futures to an all-time high of 18328.
However, a brief downturn ensued, with overbought RSI conditions signalling exhaustion, establishing the previous high as a key resistance level. Yet, the resilience of the market was evident as the downturn found support at the upper boundary of the gap at 18178, affirming it as a reliable support level.
Currently, the index futures are retesting the all-time high, with traders closely monitoring for breakout signals. A decisive breakout above the resistance level, accompanied by robust volumes, could signify sustained buyer interest. In such a scenario, attention may shift towards the 23.60% Fibonacci Extension level as a new potential target to the upside. Conversely, if selling pressures intensify, the 18178 support level is poised to undergo scrutiny once again.
Summary
With a potential sixth consecutive week of gains on the horizon, Ger 40 Futures exhibit robust bullish momentum, supported by positive economic indicators. Traders will likely closely monitor the resistance level at 18328, while the 18178 support level stands firm. Market sentiment remains buoyant amidst speculation of ECB rate cuts.
Sources: Federal Statistical Office, Centre for European Economic Research (ZEW), Reuters, TradingView
Piece Written BY Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
