This week, a modest 56 basis point climb emerged, driven by an improved sentiment toward the Eurozone’s economic outlook in December. However, this optimism encountered a setback due to unexpected reports from Germany’s industrial production, revealing a concerning 0.7% decline in November, marking the sixth consecutive monthly decrease. This downturn impacted the index futures, halting a three-day ascent.
The Ger40 Futures (EUREX: FDAX) navigated a challenging landscape marked by a three-week downturn, now showing signs of potential respite.
The tug-of-war between improving sentiment and the unexpected stumble in industrial output underscores the delicate balance influencing the Ger40 Futures. Now, traders keenly await Thursday’s US inflation figures, anticipating cues that could shape the Federal Reserve’s stance on potential interest rate adjustments.
Technical
The Ger40 Futures surged to a fresh pinnacle, marking a significant resistance level at 17123. This milestone establishes a crucial point in the current market dynamics. Notably, the previous peak at 16615 has now transitioned into a supporting role after a breakthrough, retest and subsequent rejection amid oversold conditions. This pivotal level is now identified as a key support zone.
The prevailing bullish momentum hints at a potential retest of the all-time high, as market sentiment remains predominantly optimistic. A breakthrough above the 61.80% Fibonacci Retracement Golden Ratio on high volume could reinforce the likelihood of an upward trajectory if bullish pressures persist. Conversely, the 16615 level might attract attention as a potential target in a downside scenario should bearish traders gain momentum.
Summary
The Ger40 Futures depict a nuanced picture, grappling between renewed optimism from an improved Eurozone sentiment and concerns stemming from Germany’s industrial production decline. The crucial resistance at 17123 and the supporting role of 16615 unveil a tug-of-war between bullish and bearish sentiments. The trajectory hinges on the sustained bullish momentum or potential bearish pressures in the coming sessions, closely tied to evolving economic indicators and the Federal Reserve’s cues on interest rate adjustments.
Sources: European Commission, Federal Statistical Office, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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