DAX Eyes 19,430 Resistance Amid Mixed Global Sentiment

Following hotter-than-expected Tokyo inflation data that fuelled anticipation of a December rate hike by the Bank of Japan, Asian markets saw a slight increase on Friday, with the yen recording its highest week in four months. Despite Japan's Nikkei falling 0.3% due to the yen's rally, market investors predict a 60% possibility of a December BOJ rate rise.

In the US, due to the US Thanksgiving holiday, global markets were muted; European markets were neutral, while US futures were up 0.5%. Treasury rates dropped to a one-month low as prospects of a possible rate cut by the ECB increased due to weak German inflation data.

Gold rises

The price of gold increased to about 2,720 US dollars per fine ounce at the start of the week after plunging to a three-month low of 2,537 US dollars per fine ounce in mid-November. Gold was in demand as a "safe haven" because of worries about a potential escalation in the conflict between Russia and Ukraine. Prices subsequently dropped back to 2,605 US dollars per troy ounce on Tuesday. On the one hand, this resulted from Donald Trump's choice to name Scott Bessent as the new US Treasury Secretary. Since he is seen as an advocate of prudent fiscal policies, he may be able to ease investors' worries that the US national debt may temporarily become unmanageable.

However, the truce that Israel and its adversaries agreed to in Lebanon may temporarily calm geopolitical tensions in the Middle East. Although the quotes should have more upward potential in the medium term due to their "safe haven" status—for example, because of the uncertainty surrounding future US trade policy—the sharp oscillations in the price of gold might persist depending on the news.

On the agenda today GMT

11:30     EUR                   ECB's De Guindos Speaks 

13:00     EUR                   German Buba President Nagel Speaks 

13:30     CAD                  GDP (QoQ) (Q3)

21:30     USD                  Fed's Balance Sheet

DAX leaders

Airbus Group +1.09%

Adidas +0.29%

MTU Aero Engines +0.20%

Zalando SE +0.10%

DAX laggards

Sartorius AG VZO -0.90%

Brenntag AG -0.90%

Daimler Truck Holding -0.84%

Symrise AG -0.43%

Germany 40 (DAX) 4-hour chart:

1. Current Price Action and Trend:

• The DAX is currently trading at 19,418.1, showing mild bullish momentum as it approaches a critical resistance level near 19,430.
• The price is trading near the upper Bollinger Band, suggesting short-term overextension and potential consolidation or resistance at these levels.

2. Support and Resistance Levels:

• Resistance:
• Immediate resistance lies at 19,430, the top of the current range and a key level for any bullish breakout.
• Beyond 19,430, the next significant resistance is at 19,530.5, followed by the psychological level at 19,680.5, marking the upper boundary of a broader bullish scenario.
• Support:
• Immediate support is at 19,287.7, where the middle Bollinger Band and EMA 50 align.
• Further support levels are at 19,220.8 (EMA 200) and 19,120.5, providing strong downside protection.
• Below that, support zones at 18,984.7, 18,783.0, and 18,666.9 offer additional stabilization points.

3. Bollinger Bands:

• The price is near the upper Bollinger Band, suggesting potential resistance and a possible pullback to the middle band around 19,287.7.
• A sustained breakout above the upper Bollinger Band would confirm strong bullish momentum, targeting higher resistance levels.

4. RSI and Stochastic RSI:

• The RSI is at 59.55, reflecting a neutral-to-slightly bullish sentiment with room to rise before overbought conditions.
• The Stochastic RSI is at 78.70, indicating overbought conditions. This suggests that a short-term pullback or consolidation may be likely near current levels.

5. Moving Averages:

• The DAX is trading above all key moving averages:
• The EMA 10 at 19,287.7 and EMA 20 at 19,220.8 provide immediate dynamic support.
• The EMA 50 at 19,287.7 reinforces the strength of this zone, with the rising moving averages confirming a bullish structure.

Thesis:

Scenario 1: Bullish Breakout:

• If the DAX breaks above 19,430, it could target 19,530.5 and eventually test 19,680.5.
• Sustained bullish momentum above these levels would confirm a broader upward trend.

Scenario 2: Short-term Pullback:

• Overbought Stochastic RSI conditions suggest a potential pullback to 19,287.7 or 19,220.8.
• A breakdown below 19,220.8 would indicate bearish pressure, targeting 19,120.5 and lower support levels.

Conclusion:

The DAX is nearing critical resistance at 19,430 with bullish momentum but overbought signals on the Stochastic RSI. A breakout above 19,430 would open the door to higher targets like 19,530.5 and 19,680.5, while a pullback to 19,287.7 or lower is possible if resistance holds. Traders should watch 19,430 closely for directional confirmation.