Two trades to watch: Dax hits fresh all time high, DXY ahead of NFP

The Dax hits a fresh record high, although it is starting to look overbought. DXY attempts to extend rebound, however meaningful break through 90 is needed.

Charts (3)

Where now for the Dax after hitting fresh record highs?

  • After a strong close on Wall Street and record highs in Asia overnight, the Dax is also extending gains to fresh record highs over 14,000 amid vaccine optimism and hopes of a strong economic recovery.
  • German industrial production +0.9% vs 0.7% exp.
Technical analysis Dax
The Dax trades above its 20, 50 & 100 sma on the daily chart a signal that the bulls are very much in control. Furthermore, we have seen the 50 sma cross above the 100 sma which is another strong bullish signal. 

However it is worth noting that the RSI is at 70 crossing into overbought territory so aggressive bullish trades should be made with caution. The RSI in overbought territory suggests that the price could ease back before continuing to advance higher.

Immediate resistance can be seen at 14120 today’s high and a fresh record high ahead of 14500 round number,

On the flip side, immediate support can be seen 13580 January low, a break through here will see the 50 sma come into play at 13220 before support at 13000 the 100 sma and psychological support.
Learn more about trading indices



US Dollar Index Tests 90.00 ahead of US jobs report
  • US Dollar Index is pushing modestly higher ahead of the European open, extending gains from the previous session. 
  • The closely watched jobs report is expected to show a continued weakening in job creation with just 71k new jobs expected in December down from 245k in November.

Read my colleague Matt Weller’s NFP preview piece

The US Dollar Index has been trending lower since late March last year and whilst the trend on the daily chart is still bearish, the 4 hour chart is showing signs of a reversal at least in the near term.

DXY has picked up off its fresh multi year low of 89.20 and heading towards the key psychological level of 90.00.

DXY pushed above its 50 sma and its 100 sma on the 4 hour chart whilst the RSI is also in bullish territory above 50 but below 70 the over bought level. These signals suggest there could be some more upside on the cards.

However, that would depend on whether DXY price can push above immediate resistance at 90.00. A break above this key level could bring 90.44 into focus. A break above this level could negate the current bearish trend and bring 90.60 into play before 91.00.

On the flip side look out for 89.2 January low and multiyear low, prior to 89 a key level in 2018 and 88.6 a high from 2010.
Learn more about trading forex

More from DAX

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.