The GER 40 Futures (EUREX: FDAX) treads a tightrope, caught between optimistic analyst views on global equities and concerns over a potential first weekly loss in eleven weeks. Despite this, the index currently sits at 18,635, higher for the day.
Fundamentally, strategists at Pictet Asset Management remain bullish on global equities, highlighting the broad-based rally across sectors and investors’ expectations of continued robust growth alongside central bank easing. This sentiment is echoed by the positive performance of European stocks, potentially buoying the GER 40 Futures.
Technical Analysis
The 4-hour chart paints a picture of indecision. The price trades comfortably above the upward-sloping 50-SMA and 100-SMA, indicating underlying bullish momentum. However, the failure to conquer the 20-SMA suggests a temporary hurdle. The rising RSI above 50 reinforces the bullish bias, but a confirmed breakout above the 20-SMA is needed to unlock further upside potential.
If the bulls prevail, a sustained push above the 20-SMA could see the price challenge the initial resistance at 18,839. A break above this level could trigger a surge towards the 23.60% Fibonacci extension (18,996) and 38.20% Fibonacci extension (19,094).
However, bearish pressures shouldn’t be ignored. A failure to hold above the current level could lead to a retest of the 18,489 support level. A break below this initial support would expose the 18,336 and 18,173 levels as the next potential downside targets.
Summary
The GER 40 Futures stands at a crossroads. A breakout above the 20-SMA could ignite a bullish run towards the Fibonacci extensions. Conversely, a failure to hold current support might trigger a pullback towards the lower support levels.
Sources: TradingView, Trading Economics, Simply Wall Street, MarketWatch, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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