Morning traders. ECB policymakers showed their absolute commitment to support the euro area recovery and avoid tightening of financial conditions. As I mentioned in the article yesterday, they [as expected] extended the Pandemic Emergency Purchase Programme (PEPP). However, they extended by another EUR 600bn, until June 2021, and confirmed that PEPP reinvestments will lend support to markets at least until the end of 2022. The ECB printing around 1.3 trillion at the moment, that’s the total of the programme so far, but there will probably be more to come. So the money printer is still going strong.
The ECB’s measures are an important element to help the euro area economy back on its feet, but they will only kick the growing economic problem further down the road. So yes, right now, it’s great for equities. They can go to the moon in the short-term. Free money flying around the system, lockdown restrictions are being lifted. We will have great conditions for equities (which is the reason for the recent bull market – expectations)
The fourth round of UK vs EU relationship negotiations concludes today. I doubt there will be any major breakthroughs and this could be negative for the GBP. What else do we have today? NFP! It could be a big number, but a lot less than last month, perhaps negative 8 to 10 million, many are expecting 20% unemployment in the US! There is some evidence that the US economy is bottoming out which was demonstrated yesterday’s claims data and private consumption is gradually improving. Spanish industrial production and Italian retail sales for April are also out today, expect terrible numbers there.
I mentioned Lufthansa yesterday, they’re now leaving the DAX from 22nd June. First time in 32 years. A huge blow for them.
DAX 30 Review From Last Session
During the last session, we saw the DAX 30 touch a session high of 12565 and a session low of 12328 giving us a range of 237 points compared to the average daily range of 255. At the close of play yesterday, we closed at 12417 which was 671 points above the 200EMA and 1213 points above the 50EMA. In the past nine trading days alone, the Dax has caught up to more than 15 per cent, and with an increase of around 50 per cent since the low in mid-March, so I also join the observers warning of an overheating of the market.
DAX Levels To Watch
Looking at the key levels to watch today, watch out for the previous session Point of Control (POC) at 12417 and the previous session VWAP at 12430. The value area high is currently 12454 and the value area low is currently 12383.Here are some more levels to watch out for:
- The 5 EMA (Daily): 12334
- The 8 EMA (Daily): 12129
- The 50 EMA (Daily): 11204
- The 200 EMA (Daily): 11746
DAX Technical Indicators
| Indicator | Value |
|---|---|
| RSI | 82 |
| Stochastic | K: 98 and D: 95 |
| MACD OSMA | 127 |
| Point of Control (POC) | 12417 |
| Value Area High (VAH) | 12454 |
| Value Area Low (VAL) | 12383 |
| The DAX Pivot | 12437 |
| The DAX R2 | 12673 |
| The DAX S2 | 12200 |
