The Ger 40 Futures (EUREX: FDAX) recently soared to record highs, underlining its resilience amidst market fluctuations.
Despite German Industrial Production slipping by 1.6% in December, indicating manufacturing sector challenges, the index futures have displayed remarkable strength, gaining modestly following a notable 20% surge in 2023. They’ve climbed by 70 basis points year-to-date, reflecting ongoing investor confidence.
The recent dip in German inflation, from 3.7% in December to 2.9% in January, suggests a positive trend toward inflation moderation, which could influence market dynamics. Looking ahead to next week, traders eagerly await key economic indicators, including Euro Area economic sentiment, GDP growth, and German Wholesale Prices, which could offer further insight into market direction. Moreover, attention will divert to U.S. inflation data, potentially impacting global risk sentiment and consequently affecting the trajectory of Ger 40 Futures.
Technical
The Ger 40 Futures have demonstrated a strong upward trajectory, supported by technical indicators. Breaking away from the 100-day moving average, the futures formed an ascending channel, signalling sustained bullish momentum.
Despite a brief downturn in late January, a rebound from the 16878 level propelled the futures to an all-time high at 17140, establishing a resistance level. However, sellers gained traction, prompting a retracement.
The selling pressure led to the index futures testing the 61.80% Fibonacci Retracement Golden Ratio, which has acted as an intermediate support so far. The market sentiment now hinges on this critical level: if upheld and accompanied by bullish momentum, a retest of the all-time high is plausible. Conversely, a high volume breakdown below the Golden Ratio may signal heightened bearish pressure. In such a scenario, attention could turn to the 16878 level as a potential downside target.
Summary
The Ger 40 Futures exhibit resilience amid economic data fluctuations, reaching new highs at 17140 after a rebound from 16878. Attention likely rests on the critical 61.80% Fibonacci Retracement level, determining potential future market direction. Traders will likely await key economic indicators for further insight.
Sources: Federal Statistical Office, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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