DAX tumbles as Russia orders troops into parts of Ukraine. Oil jumps on supply fears.

DAX tumbles as Russia orders troops into parts of Ukraine

Yesterday’s optimism quickly evaporated after Putin recognized separatist occupied areas of Ukraine as independent, before ordering troops into these areas on a “peacekeeping mission”.

The move has been condemned by the West which is considering sanctions against Russia. The latest actions by Russia have hit hopes of a diplomatic solution to the Russia, Ukraine conflict and is driving risk aversion. Riskier assets, such as stocks are falling, whilst sage havens are in demand.

German IFO Business sentiment data is due and is expected to show an improvement, although this is expected to be overshadowed by eastern Europe geopolitical tensions.

Where next for the DAX?

The DAX is falling lower, trading below its falling trendline, and below its 50 & 100 sma. The 50 sma has crossed below the 100 sma in a bearish signal, although the RSI is teetering on the edge of oversold territory, which could bring some relief to the index.

Sellers have broken below 14800 which has acted as key support across 2021, opening the door to 14150 January 2021 high and 13660 the late February 2021 low.

Buyers need to move above 14800 to negate the near-term downtrend, a move that could require a fair amount of momentum. Above here, 15000 round number and 15550 the falling trend line resistance could come into play.

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Oil jumps on supply fears

Oil prices are pushing higher as Russian, Ukraine tensions rise and amid fears of supply disruptions as Russian enters parts of Ukraine.

The West is condemning the latest moves by Russia and sanctions could be coming.

It seems unlikely that the West would apply sanctions to oil given Europe’s dependence on Russian energy. However, Russia could well choose to limit supply which has sent oil $2 higher.

Where next for oil prices?

Oil prices are extending the rebound from 87.50, the February low, and has re-entered the rushing channel within it traded since mid-December, before slipping out of the channel last week.

The re-entering into the channel, plus the 50 sma crossing above the 100 sma and the bullish RSI are keeping buyers hopeful of further upside.

Bulls will be looking for a move over 94.70 the 7-year high reached on February 14, to reach fresh multi-year highs.

On the downside, sellers would need to take out 92.10 to fall out of the rising channel. A fall below 87.40 could spark a deeper selloff.

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