The Ger 40 Futures (EUREX: FDAX) have embarked on a steady ascent, gaining 81 basis points year-to-date, showcasing resilience amidst dynamic market conditions.
Last week, the index futures surged to a fresh peak, reaching an impressive record-high of 17,152. A blend of corporate developments and macroeconomic indicators fuelled the buoyancy in the market. Notably, Germany’s Federal Statistical Office reported a promising slowdown in January’s annual inflation rate, inching closer to the coveted 2% target, down to 2.9% year-on-year from 3.7% a month prior. This positive news instilled optimism among investors, accentuating the allure of equities.
Additionally, bolstering the sentiment was the encouraging state of the manufacturing sector, evidenced by the HCOB Germany Manufacturing PMI Export Conditions Index’s progression towards expansion territory. As market watchers await the release of the US annual inflation rate data and the updated estimate for the Eurozone’s gross domestic product, anticipation mounts regarding potential implications for the Ger 40 Futures.
Technical
The Ger 40 Futures exhibit a clear uptrend, evidenced by both an ascending channel pattern and trading above the 100-day moving average, affirming bullish market sentiment.
The establishment of the 16878 level as a key support point underscores the strength of the recent rally. However, the emergence of the 17140 level as a resistance point following a decline from a fresh high indicates potential barriers to further upside movement.
Moreover, the presence of the 61.80% Fibonacci Retracement Golden Ratio level adds significance, as it aligns with previous market interaction points, highlighting its critical role in price action. Should bullish traders maintain their momentum, a retest of the 17140 level is plausible. Conversely, a high volume breakdown below the Golden Ratio level may signal heightened bearish pressures, potentially leading to a revisit of the 16878 support level. As traders navigate these technical levels, market sentiment remains pivotal in determining the direction of the Ger 40 Futures.
Summary
As the Ger 40 Futures hit a new peak, optimism prevails amidst promising economic indicators. With the index trading above the 100-day moving average and eyeing resistance at 17140, bullish momentum persists. However, caution is advised, as a breakdown below the 61.80% Fibonacci Retracement level could signal bearish pressures, impacting market sentiment.
Sources: Federal Statistical Office, S&P Global, Reuters, MT Newswires, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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