Best analysis

European stocks are higher today, led by gains in Germany once again. At the time of this writing, the benchmark DAX index is up a good 0.9%, supported by speculation that the European Central Bank may introduce full-scale QE at some point early next year. Yesterday, the ECB Vice President Vitor Constancioy stated that the central bank is prepared to start buying sovereign bonds in Q1 should economic conditions warrant it. This was the first time that a specific time period for potential purchases of government debt was used by a high-ranking ECB member. Today, the ECB President, Mario Draghi, called for more action, stating that “monetary policy alone cannot do all the heavy lifting.” On top of this, there was some better than expected German data as the number of unemployed workers fell by a good 14 thousand in October, which easily beat expectations. All eyes are now on the German CPI, expected around 1pm GMT. If this shows a negative reading then calls for further ECB action will intensify. Any number below the expected flat reading should be bad news for the euro and moderately good news for European stocks.

But the DAX is now just 10 points shy of entering the 10000-10050 resistance area, so we may see some profit taking here despite the outcome of the data, particularly as the US markets are closed for Thanksgiving. Nevertheless, the strong recovery from mid-October suggests there is a good chance the DAX will break through this region in the near future. If and when it does, the bulls may then target the 127.2% Fibonacci extension level of the entire down move from the summer, at 10510. Given the strong recovery and the expected follow-through in momentum, this level could well be achieved before the year-end. But as stated, there is also a possibility for a short-term pullback. There’s good support around 9800 to 9875. This area was previously resistance, so it could turn into support upon retest. Meanwhile the RSI has drifted into the overbought territory and traders who pay attention to this indicator may decide to take profit which could weigh on the index. Overall though, with the ECB keen to cement its zero interest rate policy, the DAX looks set to break to fresh record territories soon.

Trading Analysis Corner

Trading leveraged products such as FX, CFDs and Spread Bets carry a high level of risk which means you could lose your capital and is therefore not suitable for all investors. All of this website’s contents and information provided by Fawad Razaqzada elsewhere, such as on telegram and other social channels, including news, opinions, market analyses, trade ideas, trade signals or other information are solely provided as general market commentary and do not constitute a recommendation or investment advice. Please ensure you fully understand the risks involved by reading our disclaimer, terms and policies.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD stabilizes near 1.0800 as trading action turns subdued

EUR/USD stabilizes near 1.0800 as trading action turns subdued

EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.

EUR/USD News

GBP/USD extends sideways grind above 1.2600

GBP/USD extends sideways grind above 1.2600

GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.

GBP/USD News

Gold pulls away from daily highs, holds above $2,200

Gold pulls away from daily highs, holds above $2,200

Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.

Gold News

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase. 

Read more

Portfolio rebalancing and reflation trades emerge into Q2

Portfolio rebalancing and reflation trades emerge into Q2

Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.

Read more

Majors

Cryptocurrencies

Signatures