DAX Hits Year High

August 11, 2016

The DAX index has entered a bull market, oscillating in an uptrend channel since 12th July. The significant resistance level at 10473 was broken on 8th August, spurred by the market’s risk-on sentiment, resulting from central banks’ loose monetary policies.

The DAX reached the intra-day high of 10701.38 points on Tue 9th Aug, helped by the outperformance of reinsurer Munich Re and automobile sector, hitting the year’s highest level of 10740.31 on Thu 11th Aug. The bullish momentum is ongoing; it is trading above all the EMAs. Yet be aware of a retracement at this price zone, as the daily time frame KD indicator is above 90. The downside support line at 10630 will likely to be tested again.

Downside uptrend support line at 10675 followed by 10630, 10600, 10500 and 10473. Upside resistances at 10730 followed by 10870 and 10990.

The dollar index future has pulled back since 9th August, due to three reasons: the profit-taking pressure after Nonfarm Payrolls pushed the price up, the market’s lowered expectation for a Fed rate hike as economic data gave a mixed signal, and technically the KD indicator was at a high level, indicating a retracement.

Keep an eye on the Retail Sales, the Core Retail Sales, and the PPI figures, released on Friday 12th Aug. Positive readings will likely push the dollar up. Alternatively, negative figures will likely drive the dollar further down.

The weekly U.S. Crude Oil Inventories released yesterday, increasing by 1.055 million barrels, against expectations of a figure of -1.5 million barrels. This is the third straight rise. WTI crude oil spot price has entered a bearish market since 10th July, the bearish momentum increased from 25th July onwards. WTI has plunged 23.78% from the year’s high at 52.02 on 8th June to 39.65 on 3th Aug, breaching the significant support at 40 then rebounded, following by a pullback after testing the resistance zone between 43.50 to 44 three times. The bearish trend is still on going, on the daily and 4 hourly time frame, it is currently trading under all the EMAs. In addition, the dollar index shows a rebound, driving the oil prices down. It will likely test the significant support level at 40 again.

Downside support lines at 42 followed by 41, and 40. Upside downtrend line resistance at 42.70 followed by 42.80, 43.50, 44, and 45.

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