GER30 Clinches Fresh Record Highs
This is the fourth day of November in which the German index hits new all-time highs, while the European Commission upgraded its growth forecasts for the year.
The Commission said that "the EU economy is rebounding from the pandemic recession faster than expected" and despite acknowledging mounting headwinds it projected growth of 5% in 2021 versus 4.8% of the summer projections. 2022 growth rate though, was downgraded to 4.3%, compared to 4.5% previously.[1], [2]
Inflation in the Euro area is forecasted to peak at 2.4% in 2021, before declining to 2.2% in the next year, compared to summer projections of 1.9% and 1.4% respectively.
The near-term technical outlook has not changed since the last analysis, as GER30 is profitable above its EMA100 and stays in trajectory towards 16,231, although any big moves would likely require some catalyst.
Despite multiple 2021 highs this month, progress is slow and risk of pullbacks below 16,000 does not go away, with the next support provided by the October upwards trend line (at around 15,900).
Past Performance: Past Performance is not an indicator of future results.
Given these factors, it is worth taking a look at larger timeframes for some more insight, as the index trades at uncharted territory. The trend is clearly up and the trajectory points to fresh highs, but the Daily charts shows potential exhaustion ahead.
The Relative Strength Index is at it most overbought levels since August, which had triggered a correction around 700 pips within a couple of weeks, before eventual recovery and new record highs.
We reckon that for any sustained pullback to take place, the Average True Range (ATR) volatility indicator would need to pick up and add conviction, as has been the case with prior slides. If a similar pattern were to materialize, the first big support would be provided by the EMA50 (orange line), currently located below November's low (15,726).
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 11 Nov 2021 https://ec.europa.eu/commission/presscorner/detail/en/ip_21_5883 | |
| Retrieved 11 Nov 2021 https://ec.europa.eu/info/sites/default/files/economy-finance/ip156_en.pdf |
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