The Ger 40 Futures (EUREX: FDAX) have recently made headlines by surging to record highs in Thursday’s trading session, reaching a peak level of 17434. This rally now marks a 2.89% year-to-date gain for the index futures.
This remarkable rally follows a surge in tech stocks, driven by optimistic revenue forecasts from U.S. chip giant Nvidia. Despite weak economic data from Germany, including a contraction in private sector activity, particularly in manufacturing output, the index futures have defied expectations.
Germany’s preliminary manufacturing PMI for February fell to 42.3, lower than expectations, while the services PMI showed marginal expansion. Notably, a slightly lower inflation rate for January, at 2.8%, has potentially contributed to the positive sentiment surrounding the index futures despite the weaker manufacturing activity. This juxtaposition of economic indicators and market performance underscores the complex interplay between macroeconomic factors and financial markets.
Technical
The Ger 40 Futures have demonstrated remarkable resilience, maintaining an uptrend trajectory as they trade comfortably above the 100-day moving average.
This bullish momentum originated from the strong support level at 17069, with the all-time high of 17434 now serving as a formidable resistance level. Currently, the Relative Strength Index (RSI) indicates overbought conditions, suggesting a potential slowdown in upside momentum. If buying pressure diminishes, a reversal towards the 17069 support level becomes plausible.
However, a breakout above the all-time high, especially with high volume, could signal potential for further upward movement. In such a scenario, attention will likely shift to the next potential resistance level at 17519, as indicated by the 23.60% Fibonacci Extension.
Summary
Despite weak economic data, the Ger 40 Futures surged to record highs amid positive sentiment. Maintaining an uptrend above the 100-day moving average, the index faces resistance at 17434. Overbought RSI suggests the potential for a slowdown, with support at 17069 and resistance at 17519 pivotal for future direction.
Sources: EUROSTAT, S&P Global, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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