Two Trades To Watch: Dax, Oil - Wednesday, March 29

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DAX rises as confidence improves. Oil rises for a third day, EIA stockpile data is due.

DAX rises as confidence improves

  • Banking fears ease
  • German consumer confidence improves
  • DAX rises back into ascending channel

The DAX is rising for her third straight session amid an improving market mood as the turmoil surrounding the global banking sector appears to be contained.

Authorities on both sides of the Atlantic have been keen to reassure the market of the underlying strength in the industry.

Europe is also getting a leg higher from solid gains in Asia after news of Alibaba splitting into six business units boosted the Hang Seng and more broadly sentiment toward Chinese tech stocks.

On the data front, German GFK consumer confidence fell in April to 29.5 down from 30.6, but short of expectations of 29.2. Confidence in the eurozone’s largest economy has improved as energy prices continue to fall and comes after a surprising jump in business confidence earlier in the week. The data adds to confidence that the economy is growing.

Where next for the DAX?

After rebounding from the 100 sma the DAX has risen back into the multi-month rising channel. The upside is being capped by the 50 sma. Buyers will look to rise above the 50 sma at 15275 in order to extend the bullish trend towards 15700 the 2023 high.

Should sellers successfully defend the 50 sma, a break below the multi-month rising trendline at 15035 could open the door to a deeper decline to 14800 the 100 sma and the weekly low.

(Click on image to enlarge)

dax chart

Oil rises for a third day, EIA stockpile data is due

  • Iraq – Turkey supply dispute continues
  • API stockpiles fall by 6.1 million barrels
  • Oil rises but bias is still to the downside

Oil is extending gains for a third consecutive day amid ongoing supply concerns and as the demand outlook improves.

A dispute between Turkey and Iraq surrounding oil supply from Kurdistan remains unresolved and has resulted in halted shipments of around 400,000 barrels a day, tightening the market. Supply concerns will continue to support oil prices while the dispute continues.

Meanwhile, easing banking concerns added to the bullish mood toward oil. As did a significant fall in stockpiles. The API reported a 6.1 million decline in US inventories last week, the largest decline so far this year. Investors will now watch closely to see whether this is confirmed by government figures later today.

US EIA oil inventories have gained 10 out of the past 11 weeks. A surprise rise in inventories could put pressure on the oil price.

Attention will also start to turn to the OPEC+ meeting next week.

Where next for oil prices?

Oil prices have rebounded from the 15 month low of 64.35,. However, the boas is towards the downside, as the price trades below the 50, 100 & 200 sma, as well as the multi-month falling trendline.

While bulls push the price higher for now, resistance can be seen at 76.50 the falling trendline resistance ahead of the 50 sma. A break above here exposes the 100 sma, but prices could struggle much beyond here.

On the downside, support is seen at 72.50 the January 5th low, ahead of 70.00 the psychological level.

(Click on image to enlarge)

oil chart

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