GER30 finds support in longer-term downtrend

  • GER30

Friday's selloff (blue arrow - left chart) has positioned FXCM's DAX CFD, the GER30, between the lower blue and red bands in its bearish zone. However, this resulted in a short-term oversold condition on the hourly chart (green rectangle). This downside froth prompted support for the GER30 at its S2 pivot, as the oscillator normalised. However, bounces may prove suspicious, given the nature of the weekly chart below.

The GER30 weekly chart has robust overhead resistance above it, around the 14,800-14,900 area (red shaded horizontal). This critical level coincides with the 61.8% retracement of the index's previous impulse move down, implying a confluence of factors acting against price appreciation. Furthermore, last week's candle (blue arrow) indicates a capitulation by the bulls, who took the price up to the high of 14,627 before losing control to the bears. As a result, the DAX closed down for the week.

Global risk markets, including the DAX, are grappling with central banks' hawkishness. Last week, Fed Chair Powell supported moving faster on hiking interest rates to control inflation, reinforcing a likely 50bps move in May. Moreover, the probability for a 75bps increase in June is over 80% as per fed funds futures. This aggressiveness is also reflected in the German Bund, which yields 0.9%.

The higher rates make equities less attractive as opportunity costs and risk premiums continue to rise.

Trade the News: View our Economic Calendar

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.