- European markets are likely to stay positive today, with US markets on holiday.
- Investor confidence has been boosted by receding French election fears and a potential Fed rate cut.
- As DAX breaks out, dip-buying is seen as the dominant trade.
After Wednesday’s rally, the markets are likely to remain supported in Europe with the US out celebrating Independence Day. Dip-buying remains the dominant trade and after the recent consolidation, it looks like the German index has set the stage for a fresh rally. Concerns about French elections have receded somewhat, and investors appear more confident that the US Federal Reserve will cut rates in September.
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Current Market Drives
UK investors are heading to the polls for general elections, where a landslide victory for Labour seems all but certain, spelling trouble for the Conservatives. In Europe, attention shifts to the upcoming French election’s second round.
A unified effort to block Marine Le Pen’s far-right National Rally from seizing power gains momentum ahead of the legislative election. Warning of far-reaching consequences for France and the Eurozone, notable figures urge voters to consider their choices carefully.
Recent rebounds in stock markets signal growing investor confidence in thwarting the National Rally’s ascent. Eyes are now on the June jobs report, following a string of underwhelming US economic indicators, reinforcing expectations for a September rate cut by the Fed.
DAX Chart Analysis and Trading Strategies
Breaking free from a descending triangle pattern on Wednesday, the DAX surged, breaching key levels like 18286 and 18350. This critical zone marks a convergence of various technical indicators, offering strong support for potential bounce trades on any retracements.
Initial upside targets include 18651, the recent high preceding the dip, and liquidity above the all-time high near 18900. Despite prevailing macro concerns, the long strategy on pullbacks has proven effective thus far in 2024 across both DAX and major US indices like the tech-heavy Nasdaq.
The DAX’s positive long-term outlook, supported by consolidation above the 200-day average and the 21-day exponential, signals readiness for another rally. A healthy pullback from the May all-time high and subsequent sideways movement indicate strengthening bullish momentum.
If support at 18286-18350 falters, a retracement to the 18000-18050 region could occur. However, given this week’s bullish breakout, this scenario appears less likely.
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Disclaimer: This article provides information only and does not serve as an inducement, offer, advice, or recommendation to invest. Remember, investing involves significant risks, and decisions remain solely with the investor.
