GER30 Upbeat as Market Prepare for the ECB’s Policy Meeting Later in the Week

  • GER30
    (${instrument.percentChange}%)

GER30 Analysis

The German index starts the week on the front foot, as European markets take their cues from their Asia-Pacific counterparts. Sentiment seemes to be lifted lifted by factors such as further Covid-19 lockdown easing in Beijing, which will now allow the return to workplaces and dine-in services to resume. [1]

On the other hand, the hawkish shift of the European Central Bank could weigh on the Index, with the policy decision expected this Thursday. President Ms Lagarde, had recently hinted at a conclusion of the asset purchases program early in Q3, rate-lift-off in in July and an exit out of negative rates by the end of the third quarter. [2]

GER30 had a good May and the current month is also profitable so far. Today's bullishness gives it the chance take a shot at the 200 Days EMA (at round 14,740), but the immediate upside contains multiple roadblocks.

It will then encounter the 61.8% Fibonacci of the 2022 High/Low drop (14,821) and the March High (14,960), while breaking above all three levels and look towards 15,987 will likely require sustained risk-on mood.

Despite the solid start to the week, we are cautious around its ascending prospects, given the roadblocks ahead and the fact that the Relative Strength Index (RSI) had not followed GER30 higher on Friday.

This divergence can lead to downwards pressure and a test of the EMA200 and the upper border of the daily Ichimoku Cloud (at around 14,200), but a catalyst will be needed for further weakness below the lower band, which would expose it to the ascending trendline form this year's lows (13,680-70).

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 06 Jun 2022 http://english.beijing.gov.cn/specials/COVID19/latest/202206/t20220606_2729464.html

2

Retrieved 02 Jul 2022 https://www.ecb.europa.eu/press/blog/date/2022/html/ecb.blog220523~1f44a9e916.en.html

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