Market Analysis

Trade Tensions hit Stocks; German IFO worse than expected

The trade tensions have hit stocks, with a sell-off on share markets yesterday, including DAX, one of the most important markets in Europe. It is now trading well below 12000 points.

In Germany, the worse-than-expected IFO Business Climate Index reflected uncertainty in the German executive floors regarding the trade dispute between the USA and China, which is burdening global trade.

The British drama continues to hover over Europe. In Great Britain yesterday the election marathon for the European parliament began. The first speculations have already hit the wire that Theresa May could soon resign if the result is bad for the Tories.

Since our last look at the DAX on May 6 (link: Will the DAX cool down or can the dividend season drive it higher?) the market has not been able to climb higher. It failed at the November 2018 highs.

However, the market was also unable to make a breakout to the bottom. On the contrary, the market is moving in an upward channel. Yesterday the market reached the lower edge of this channel for the second time in two weeks.

The 11930 level could be crucial for the market’s further progress. If the market manages to push itself off from here and the bulls take over from now on, the September 2018 highs could form a first significant resistance. If the positive trend then continues, the next resistance zone could be at 12550 points. Further resistance could then occur in the 12800, 12950, and 13150 ranges.

However, if the 11930 mark proves too strong, the first significant support may be at 11625. Further support could then be found in the zones of 11360 and 11105. If the market breaks through here, a re-evaluation will be needed.

The MACD oscillator has shown a bearish cross. When breaching the zero line, it might confirm bearish sentiment.


Ger30 - daily chart. Source: ActivTrader

Ger30 Daily Chart | Source: ActivTrader


Written by Daniel Schuetz, External Analyst, ActivTrades

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided.