DAX reached the nearest resistance

10 February, 2017

European stocks are trading higher today due to a general risk-on triggered by Donald Trump. He commented on deregulation and corporate tax cuts and commited to introducing a plan in 2-3 weeks which was more than enough for US stocks to surge towards new record highs. The sentiment was visible also during the Asian session (JAP225 +2.25%) and can be seen during the early European trading. 

If that wasn’t enough, we got a great piece of data from China. Chinese exports rose 7.9 percent in dollar terms in January, the fastest pace in almost two year. A powerful rebound in Chinese trade may only mean good things for global markets - adding to the positive sentiment carried over from the US session. Contracts for European equity indices were seen around 1% higher already, DAX is currently gaining 0.3%.

Due to a confluence of bullish factors, DAX opened with a distinct bullish gap. However the bullsih gap may be closed, especially as the nearest crucial short-term resistance area around 11700 is being defended. There is a formed bearish engulfing, if the signal is confirmed we could see a leg lower. Still, we do not expect a change of trend on DAX right now as the bullish wedge pattern has been realised. A breakout above the nearest resistance would be an extremely strong bullish signal and could cause a rally towards 12000.

DAX respects the nearest support area at 11700, source: xStation5

Company news:

HeidelbergCement leads gains in DAX (+2.2%) after Berenberg raised rating to buy with target at 103.6. Heidelberg was previously rated hold by Berenberg. According to BBG, the price target  was raised to 03.60 from EU86, implies 18% upside from last close.

According to BBG, HeidelbergCement had 10 buys, 12 holds, 8 sells before today and this is the first change by Berenberg since Oct 17 when the rating was downgraded to hold from buy. The shares have climbed 3.4% from EU84.92 to EU87.81 since then.

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