Two trades to watch: DAX, Nasdaq

DAX extends its rebound ahead of ZEW sentiment data

The DAX rallied 1.7% yesterday after British Chancellor Hunt ditched most of the min-budget, boosting sentiment across the board.

Hunt scrapped most of the tax cuts and planned to cut spending to reduce concerns over the amount of borrowing needed.

Stronger than expected is banks earnings also boosted Wall Street, which is transferring to an upbeat open in Europe.

Attention now shifts to German ZEW economic sentiment, which is forecast to decline to a record low of -66 in October, down from -61.9 in September and below the 1992 low of -62.

Concerns over the country’s energy supply are expected to increasingly weigh on the outlook for the eurozone’s largest economy.

Where next for the DAX?

The DAX has rebounded off the 11810 2022 low, retaking the 20 sma, which along with the bullish RSI, keeps buyers hopeful of further upside.

Buyers will look for a move over 50 sma at 12845, opening the door to 13000, the round number, and September 20 high. Beyond here, investors will look ahead to 13570, the September high.

Should sellers successfully defend the 50 sma, sellers could push the price back towards 12385, the 20 sma, and the July and February low. A break below here opens the door to 12000 and 11800 the 2022 low.

Nasdaq rallies with earnings in focus

The Nasdaq rallied 3.4% yesterday, paring steep losses from Friday, as investors started to position for the start of tech earnings season, which kicks off today with Netflix.

Solid earnings from several key banks have helped to ease immediate recession fears and pessimism over the outlook for the US economy.

Within the Nasdaq, Netflix jumped 6.6% ahead of earnings today, and Tesla rose 7% ahead of earnings on Wednesday.

Despite the move higher in stocks, it’s worth noting that volumes were light and that forecasts for a US recession in the coming 12 months have now hit 100%, according to Bloomberg economics.

There is no high-impacting US data meaning that the focus is likely to remain on earnings.

Where next for the Nasdaq?

The Nasdaq had traded in a falling channel since mid-August. The price has rebounded off the 10095 2022 low and is attempting to break out above the 20 sma and the upper band of the falling channel at 11250.

A breakout of the upper band of the channel could open the door 11700 the October high, before exposing the 50 sma at 12075.

On the flip side, failure to break out could see the price test support at 11050 the June low ahead of 10700. A fall below 10430 creates a lower low.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.