Two Trades To Watch: Dax, Gold - Tuesday, May 11

Dax follows Wall Street lower, ZEW Economic Sentiment up next. Gold struggles at 200 day moving average ahead of CPI data.

Germany, Flag, German Flag, Waving Flag


Dax follows Wall Street lower, ZEW Economic Sentiment up next 

After a steep sell off overnight on Wall Street as inflation fears creep higher, the German Dax, along with European peers is tanking lower. 

High growth tech stocks are expected to take the biggest hit, in light of the Nasdaq’s -2.5% decline as investors turn their attention away from growth to value. 

German ZEW Economic Sentiment Data will be in focus after falling in April on covid & lockdown concerns. The headline figure is expected to tick higher to 71 in May, up from 70.7. 

Where next for the German Dax? 

 After breaking above the key 15,000 level in early April, the Dax has struggled to make any clear directional progress.  

However, panning out, the DAX trades in a clear up trend from the mid March pandemic lows. It trades above its 50 EMA on the daily chart and is currently testing the 20 EMA at 15200. The uptrend remains in tact for now. 

Round number 15000 provided resistance on the Dax’s run higher. It is expected to provide support on the way down. It would take a move below this level to see the sellers gain traction and head towards 14400 the ascending trendline support dating back to mid-March and horizontal support from mid-March.  

A break above the all time high of 15500 is needed for the Dax to push northwards (DAX). 

Gold could struggle at 200 day moving average ahead of inflation data 

Whilst inflation fears have sent stocks tumbling over, treasury yields have remained steady below 1.60%.  

The weak US jobs report reassured the market that the Fed will keep interest rates low for longer benefiting no yielding gold.  

The deterioration in risk sentiment overnight is likely to underpin the safe haven, although the mild lift in the US Dollar could weigh on the precious metal. 

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