DAX: Upside Target Reached, Look Out Below!

Submitted by Nic Lenoir of ICAP

Dax futures have bounce to our 5,740/5,725 target zone. This corresponds to the 100dma, formerly key support and now resistance, the highs of Jan 22 and Feb 3 and the 50% retracement of the sell-off from the tops. If the Jan 11 highs are indeed a major intermediate top, the market should hold resistance here and trade down to test 5,626/5,600, which if broken will confirm further downside towards 5,300, 5,040, and finally 4,570/4,590 which is next major support. On the upside we would use a daily close above 5,780 as a stop. Major focus will be on 5,626/5,600 in the short-term.

For the S&P we had recommended 1,100/1,107 as the target sell zone and we would use a daily close above 1,125 as a stop. On the downside we see a first intermediary support at 1,092 and key support at 1,076/1,066. A break of this zone would indicate downside towards 1,006, and possibly 957/944 which is the next major support zone.

Comforting our vviews in equities, Gold has so far struggled to bypass the major intermediary resistance at 1,125. As indicated over the pst couple weeks, only a bypass of this resistance on a daily close will confirm a rise to 1,165 which is the major resistance in the medium term. On the downside if we break 1,097/1,100 we should push lower to test the 1,028/1,026 and 985/990 supports. This last support cannot be bypassed if we are to remain in a bullish dynamic. For the short term we keep our focus on the 1,125 resistance.

Nothing new in Fixed Income, we have triggered H&S patterns in the bund and 10Y Treasury future, and a pull back to 123 and 117-16 respectively should be sold. Watch a daily close above those levels to invalidate the bearish dynamic. Focus on key supports at 116-16, and below 114-08/27 which is our key support zone for the medium term.

Good luck trading,

Nic   

Comments

[aint no fortuna...]

Thanks Nic. I'm sure JPM's prop desk appreciates the heads up.

[Oso]

thanks Nic, actually really appreciate the commentary.

[Anonymous]

Thanks for talking about European indices (a french guy)

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