18-06-2018 Dax Technical Analysis

The dust has settled from last the ECB’s interest rate decision on Thursday. The 18-06-2018 DAX 30 has now broken the sideways range and resumed a bullish trend. But despite a clear improvement at first glance, the DAX continues to retrace the Thursday gains.

We saw a strong performance on Thursday and finished trading over the 13,000. The retracement began on Friday, but we are still above that key level for now. All eyes will be on how deep that pullback will go. The obvious consideration is whether a new buying opportunity will present itself at the base of this pullback. But the other side to consider is whether the trade disputes continue to way heavily on futures expectations.

18-06-2018 Dax Outlook

I am going to stick purely to the technicals. Therefore I will forget about ‘sitting on the fence’ and debating both sides of the argument.

I am expecting a continuation of the Dax Rally this week. The weakening Euro improves the competitive opportunities of domestic companies on the world market. The ECB’s persistent zero interest rate policy is easy monetary policy. And we’re running into the slower summer months with a relatively clear monetary policy roadmap. That’s the bulk of my argument for now.

I acknowledge that there are various looming government issues (Germany and Italy) and trade disputes, but there are ‘always’ distractions in the markets. Always. For those who want to understand the other side (of the positivity), then consider the following. The German’s have an asylum dispute which could turn into a government crisis. If so, that should weigh on the prices. Ultimately it could lead to an end to the current government, new elections and a long process that nobody wants on the stock markets. The CDU rejects the rejection of refugees, but the CSU are demanding it.

Last week was all about the central banks, this week may bring more specific issues out to the front. So we will keep our ears peeled for more updates.

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