Dax hits fresh all time high. Gold looks vulnerable although watch oversold conditions.

Dax hits all time high

Asian stocks recovered overnight, US futures remain firm and Europe is pointing higher as US bond yields pullback.

Soothing words from central bankers helped ease feared over rising inflation expectations.

The DAX surged 3.3% in the previous session pushing the index to a fresh all time high of 14440.

German exports for January 1.4% vs 0.4% in December & -0.1% expected. Trade balance January €22.2 billion vs €16.4 billion in December.

Eurozone unemployment and Q4 GDP (3rd revision) due later.

Where next for the Dax?

The Dax broke out of the 2 month holding channel breaking above the upper band of 14160 and surging to a fresh all time high of 14440. 

Whilst the price has eased back the set up still favours the bulls above 14160. The RSI is also supportive of further gains as it sits in bullish territory but remains some distance from overbought at 70.

A break over 14440 could see the Dax eye the psychological level of 15000.

On the downside, support can be seen at the aforementioned 14160. A break through here could see the price test the 50 sma at 13900. It would take a break below 13565 the lower band of the horizontal channel for the bears to gain momentum.

Gold bearish bias remains 

Gold to a fresh 9 month low on Monday as the US Dollar bounced higher hitting a 3.5 month high on an upbeat economic outlook (GLD, UUP).

Bullish sentiment in the stock markets could cap any upside for gold as global risk sentiment remains well supported by optimism surrounding a solid economic recovery.

Where next for Gold?

On Monday Gold fell below the descending channel which dates back to early January. 

Adding to the bearish set up the 50 sma crossed below the 200 sma in a death cross pattern.

However, the RSI is in oversold territory so some consolidation or even a move higher could be on the cards before a downtrend continues.

Should gold break meaningfully below the lower band of the channel at 1685 then the bears could extend the sell off to 1635, 7th April low and then 1600 round number.

On the upside, a recovery back over 1700, the round number could see Gold look towards 1714 the overnight high and back up towards 1714 4th March high.