Are the Ger 40 Futures Poised for a Six-Week Streak?

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. 


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.  


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 

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