21-06-2019 DAX Analysis

The Daily DAX Thread

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DAX Analysis Intraday

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Wall Street Hit By Iran Tensions

United States stock markets started the Friday trading session with losses amid tensions between the US and Iran, which escalated after Tehran confirmed it shot down a US drone that allegedly entered its airspace. Earlier today, US President Donald Trump confirmed he withdrew an order at the last moment to launch retaliatory airstrikes against Iran, adding that he is in "no hurry" to strike Iran and that new sanctions against the country were added last night.

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Iranian Foreign Ministry Spokesman Abbas Mousavi (pictured) said on Twitter on Friday that Tehran responds "to diplomacy with diplomacy" and to "war with firm defense" following a recent incident when Iran shot down a US drone that allegedly entered its airspace. His remarks comes as a response to the earlier comments made by United States special Iran envoy Brian Hook, who said that Tehran does not have a right to respond to US diplomacy "with military force." "Iran is responsible for escalating tensions in the region. They continue to reject diplomatic overtures to deescalate tensions," Hook pointed out earlier in Saudi Arabia where he met with the country's Deputy Defense Minister Prince Khaled bin Salman. Meanwhile, recent reports indicated that US President Donald Trump warned Iran of a military strike, setting a deadline for Tehran to engage in talks with Washington over the issue.

Russian Deputy Foreign Minister Sergei Ryabkov said on Friday that the United States and Iran are on a brink of war, following the recent incident in the Strait of Hormuz when Iran shot down a US drone. TASS reported. "According to available information, the situation is clearly very dangerous. I would say it is like being on the brink of war," Ryabkov pointed out. President of Russia Vladimir Putin said yesterday that a US military intervention against Iran would lead to a catastrophe in the region. Meanwhile, earlier reports indicated that US President Donald Trump warned Tehran of a possible US military strike and set a deadline for the Iranian government to engage in talks on the issue with Washington.

Eurozone Output at 7-month High

The output growth in the euro area was higher in June with the PMI Composite Output Index standing at 52.1, IHS Markit said in a release on Friday. The figure was the highest observed in a 7-month period, growing from May's 51.8.

DAX Long Signal

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German and European PMI Numbers

Germany's manufacturing PMI stood at 45.4 in June, increasing from 44.3 in May and reaching a four-month high, IHS Markit announced on Friday. The services PMI recorded a two-month high at 55.6, increasing by 0.2 compared to May. The composite PMI output index was reported as unchanged from the previous month at 52.6. Growth in the second quarter was strongest since the third quarter of last year, but expectations for output growth in the next year declined to lowest levels since October 2014 as manufacturing production declined for the fifth month in a row in June. New export orders have been falling for the past 10 months and outstanding work declined for the eight time in eight months. Trevor Balchin, economics director at IHS Markit, said: "The Future Output Index fell to a 56-month low in June as a result of weaker sentiment among service providers. Manufacturers currently expect broadly no change in output over the next 12 months, although this represents an improvement compared with the pessimism of recent months."

The Morning Briefing

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European Indices Mixed

European stock indexes were mixed in premarket trade as sentiment worsened following reports that the United States was prepared to bomb Iran, but President Donald Trump decided against it at the last minute. Investors are expecting PMI data from Germany and the European Union during the trading session and focus in the United Kingdom remains on the election of a new prime minister after the final two candidates in the race were picked. Party members are set to decide if Boris Johnson or Jeremy Hunt will be the new Tory leader.

Gold breaks $1400

Gold prices surged above $1,400 per ounce to levels last seen in September 2013 as geopolitical tensions increased following Iran's capture of an American drone. United States President Donald Trump had approved strikes on the Middle Eastern country after the incident but withdrew his decision later on. Meanwhile, Washington is yet to find common ground with Beijing on trade as trade negotiations are due to continue following a push from Trump and his Chinese counterpart Xi Jinping.

Trump Backs Down

United States President Donald Trump authorized strikes on Iran in the wake of Tehran's downing of a US drone, but abruptly changed his mind a few hours later, the New York Times reported. Multiple senior administration officials, some of whom were involved in the decision, "were expecting a strike as late as 7 pm Thursday" local time. They stated Trump approved strikes against targets such as radar and missile batteries. "The operation was underway in its early stages when it was called off... Planes were in the air and ships were in position, but no missiles had been fired when word came to stand down," one unnamed official explained. It is unclear what led Trump to change his decision and whether strikes are still a possibility in the near future.

Russian Sanctions Continue

The European Union member states unanimously voted to extend the sanctions levied against Russia for another six months. Spokesperson of the European Council ​Preben Aamann tweeted that punitive economic measures were prolonged due to a lack of implementation of the Minsk Agreement. Previously, Brussels sources said that the EU would reach such a political decision since the accord tasked with stopping the civil war in Ukraine is mostly ineffective. It is not known at this moment if the list of sanctioned individuals and entities tied to the Kremlin will be extended.

BitCoin nears $10k

Bitcoin experienced a renaissance after posting losses in the previous two days to flirt around the $9,500 mark on Monday. The digital currency was up 1.65% to go for $9,431 at 9:44 pm CET after having briefly touched the $9,500 mark earlier in the day. The rise came after various parties expressed concerns with Facebook's upcoming Libra cryptocurrency in the last few days, including the Bank of England, the United States Federal Reserve and US Senate. Meanwhile, Bitcoin Cash dropped 0.94% to sell for $412.98 at the same time.

Economic Calendar

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Where Will The DAX Go?

The DAX explodes out of the blocks this morning, mainly because of the central banks dovish stance. It's worth tidying up the charts a little bit, for example with my hourly chart to simplify things. We can quite clearly see that the blue markers are representing the swings. Let's use a pitchfork to give a bullish answer. You will need to watch the video to learn more about how to use pitchforks on the DAX.

I think the biggest risk to traders at the moment is the fear of missing out and buying the DAX high. However you can also build a case the other way around, that traders may miss out on this massive momentum if they do not buy now. Which side are you on?

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