Technical Analyst, Saxo Bank
Summary: DAX and EuroStoxx50 are testing March peaks after correction. Indices are warming up to test all-time highs
DAX is close to be testing February peak at around 15,706. The Index is back above the Cloud i.e., bullish indication. However, RSI has not yet closed above 60 threshold meaning it has not yet switched to positive sentiment. If it cannot close above 60 there is a correction looming. A minor correction. Down to test the cloud and the 21 and 55 MA’s. To reverse the short-term uptrend a close below 14,809
However, the trend is up and DAX is likely to take out February peak and move higher – after a possible correction.
Weekly. If DAX closes above 15,706 there is no resistance until all-time high at around 16,290 just above the 1.382 projection of the March correction.
Weekly trend is up but there is RSI divergence indicating the uptrend is weakening. But if weekly RSI closes above its falling trend line it will support the higher DAX levels. A close above the dashed horizontal line will cancel the divergence an much higher DAX levels will be in the cards.
To reverse the medium-term uptrend a close below 14,458 is needed.
GER40 levels: Testing resistance at around 15,656. A move above 15,707 is likely to fuel another leg higher to at around 16,184.
To reverse the uptrend at close below 14,800.
EuroStoxx50 testing March peak. A close above and an RSI close above 60 will confirm the uptrend that will have short-term potential to 4,455.
However, a correction could be seen down to around 4,200 before the Index moving higher.
Medium-term. Bearish break out of the rising trendline seems to be short-lived. Weekly RSI is above to break above its falling trendline which would be an indication that EuroStoxx50 is very likely to test and event taking out all-time highs at around 4,415 and move to 1.382 projection at around 4,455 possibly move to 1.618 projection at 4,536.
To reverse medium-term trend a close below 3,980.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.