Technical Update - DAX down trends point to test of July lows. Euro Stoxx 50 testing key support.
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
After DAX Index was rejected at the falling trend line and formed a Bearish Engulfing top and reversal pattern selling has been heavy. The down trend was confirmed Friday and the key support area at around 12,438 is likely to be tested within few days. RSI close below 40 threshold supporting the bearish outlook.
To reverse the trend a close above 13,948 is needed. A close above Friday’s high at 13,375 will just put the down trend on hold.
If DAX close below key support at 12,438 there is not strong support before around 11,586.
RSI on weekly chart is testing the rising trendline and if a weekly close below the 11,586 level is likely to be reached.
Euro Stoxx50 is in a confirmed down trend despite RSI still above 40. Support at around 3,581where a minor bounce should be expected. However, Bollinger bands are expanding and a break of both the support and a break back below the falling trend line (black) is likely to occur in the coming week. Minor support at around 3,477-3,466.
July lows at around 3,357 is likely to be tested in a couple of weeks. To reverse the down trend a close above 3,7070 is needed.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)