The German DAX 30 index is struggling to break above 13,185 which is the previous high from Thursday. In order for the market to remain bullish, we need to see a break above that level very soon. If the market breaks this level, then the target will be in the region of 13,240. This target would be the underside of an upper median line on the pitchfork. You could also draw a similar line from the late-November low through Thursday’s high.
The DAX opened very quietly this morning despite the fact that this week there are many high impact news events. To see the economic calendar, open up the DAX chart. The market kept lower this morning then traded in a 20 point range before closing the gap shortly before the European open. Since the market has opened the range is around 43 points. So we can expect a range extension later on today.
09-12-2019 DAX Key Levels
NFP printed a strong number on Friday and provided the catalyst for the rally in the afternoon across the markets. Notice how the low this morning is the value area high number we sent out from Friday, see the chart below. Here are the key levels for today.
|Point of Control||13153|
|Value Area High||13173|
|Value Area Low||13083|
09-12-2019 DAX Market Profile
We can see a double distribution date from Friday on the DAX market profile. This technical analysis tool suggests that there is a high probability of price filling out that low volume zone. Watch out for a range extension to the downside today, if we fail to break the Friday high.
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The UK General Election
I will be going to the ballot boxes on Thursday, to cast my general election vote, again. Watch out for the exit polls and expect heavy volatility on the forex market (especially for GBP pairs). We should know the final result by early morning on Friday 13 December. It is notoriously difficult to predict the outcome of the UK election but opinion polls show that the Conservative Party is ahead of Labour.
326 seats are needed to secure a majority. YouGov, which was the only seat projection model correctly predicting Theresa May’s loss of absolute majority in 2017, predicts a solid majority win for the Conservative Party. They predict 359 seats versus 211 for Labour, 13 for LibDems and 43 for SNP. Maybe that model was lucky predicting the right result – but what else is there to rely on?
Conservative Party will probably win an absolute majority. That means Boris Johnson can get his Brexit deal through Parliament before Christmas without having to rely on DUP votes (or his Conservative haters who voted against him). Labour have a lot of work to do to win here.
Another scenario is that the opposition parties (Labour, LibDems, SNP, Plaid Cymru and Greens) secure a combined majority. If that’s the case, we’ll probably see a second EU referendum with “remain” as one of the options. And the drama will continue.
Worst case scenario is a situation with a terribly hung parliament, which is unable to pass anything. In this scenario, the UK will probably ask the EU for another extension, again, which we expect the EU to give despite Brexit boredom in Brussels. And then we probably get yet another snap general election in this scenario. Snore!