Technical Analyst, Saxo Bank
DAX was rejected at key resistance at 13,762 in the form a Shooting Star candle on the 4th August. A Shooting Star could be a top and reversal signal, but the jury is still out. Often it just signals a pause in an upward trend. Which one this is we’ll have to wait for a few days. If DAX closes above the height of the Shooting Star candle market will continue higher. For DAX it is likely to test the (black) falling trend line and possibly the 0.764 retracement at 14,162, but the 200 SMA could also be tested.
If instead DAX closes below 13,564 selling pressure could resumes and bear trend will resume if DAX closes below 13,335.
GER40 cfd/DAX future has now failed twice to close above resistance at 13,675. Maybe today is a third time. At th4e time of writing it seems like it. If GER40 drops below 13,330 bear trend is confirmed and support at 12,858 is likely to be tested.
Euro Stoxx 50 has risen in a steep trend. If the trendline is broken it is first warning of a likely correction possibly trend reversal. If Stoxx 50 closes below 3,664 a correction is confirmed. The Black falling trend line could be tested but the big test would be the 3,600 support. A close below bear trend is confirmed new lows are likely.
However, the trend is still up until proved otherwise and key resistance is at 3,857.
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.