The Germany 40 rallied over 2% back to 23,000 on Friday as the news broke that Chancellor in waiting Friedrich Merz’s Conservatives and the Green party, whose support he needs, had reached an agreement, which could see his landmark infrastructure and defence spending package pass into law.
It had already been a volatile week of trading up to that point, after President Trump aimed his tariff assault firmly at the EU, verbally threatening on social media to add tariffs of 200% on exports of alcoholic goods from Europe. This was in response to the retaliatory penalties the EU had imposed back on the US, after President Trump’s proposed 25% tariffs on steel and aluminium exports went into force on Wednesday.
Now, at the start of this new week, while sentiment has turned back down for US indices after weekend comments from US Treasury Secretary Bessant, where he stated he isn’t worried about the recent sell off in US stocks, dismissing it as a healthy correction. The Germany 40 remains steady as traders await fresh updates on any potential escalation of a US/EU trade war, but more importantly tomorrow’s parliamentary approval of Germany’s historic spending plans.
The question is, could this vote boost the Germany 40 index back to towards all-time highs at 23474 and possibly beyond, or is it a sell the fact moment, which could see a bout of profit taking back down to lower levels?
Technical Update:
While US equity indices have encountered strong selling pressure of late, there has been evidence of a rotation of investor positioning, where sales of US equities, have prompted buying of European stocks.
This has seen further strength emerge for the Germany 40 index, with only brief price selloffs being seen before buyers are again found at higher levels. This has maintained the positive pattern of higher highs and higher lows in price.
With the Bundestag vote due in Germany on Tuesday, this may have important implications for future market sentiment and price trends.
Going into this important news, traders should be aware of possible support and resistance levels to monitor just in case more directional moves in price develop.
Potential Resistance Levels:
As we have said, so far at least this remains a positive trending price pattern, and despite last Monday’s initial weakness, price action overall was constructive. This saw a rally develop from Tuesday’s 22240 (March 11th) low, as once again, buyers were found at a higher level than before. As the chart above shows, the earlier low was at 22111, on February 21st.
This upside move in price now shifts the focus for traders to a possible resistance level at 23474, which is the March 6th all-time high. Having held before this level will likely need to be broken on a closing basis, if a more extended phase of price strength is to possibly emerge.
Closing breaks above this 23474 all-time high, could trigger continued price strength, which in turn, might open potential for moves towards 23944, which is the 38.2% Fibonacci extension of the March sell-off (23474 on March 6th to 22240 on March 11th) and if this gives way, even towards 24234, which is the higher 61.8% extension level.
Potential Support Levels:
Any negative reaction to Tuesday’s vote, may see downside pressure build and as the chart above shows, the first support could prove to be 22766, which is equal to half of last week’s price strength. This level giving way on a closing basis, might highlight signs of increasing selling pressure and the possibilities for further price declines.
However, if closing breaks below 22766 do materialise then the last correction low from March 11th at 22111 may still be more important to traders.
Closes below this level may show that buyers of the Germany 40 index are no longer willing to buy at higher price levels for the time being, which in turn could lead to a deeper phase of price weakness and retracement of the December 20th 2024 to March 6th 2025 advance.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
It had already been a volatile week of trading up to that point, after President Trump aimed his tariff assault firmly at the EU, verbally threatening on social media to add tariffs of 200% on exports of alcoholic goods from Europe. This was in response to the retaliatory penalties the EU had imposed back on the US, after President Trump’s proposed 25% tariffs on steel and aluminium exports went into force on Wednesday.
Now, at the start of this new week, while sentiment has turned back down for US indices after weekend comments from US Treasury Secretary Bessant, where he stated he isn’t worried about the recent sell off in US stocks, dismissing it as a healthy correction. The Germany 40 remains steady as traders await fresh updates on any potential escalation of a US/EU trade war, but more importantly tomorrow’s parliamentary approval of Germany’s historic spending plans.
The question is, could this vote boost the Germany 40 index back to towards all-time highs at 23474 and possibly beyond, or is it a sell the fact moment, which could see a bout of profit taking back down to lower levels?
Technical Update:
While US equity indices have encountered strong selling pressure of late, there has been evidence of a rotation of investor positioning, where sales of US equities, have prompted buying of European stocks.
This has seen further strength emerge for the Germany 40 index, with only brief price selloffs being seen before buyers are again found at higher levels. This has maintained the positive pattern of higher highs and higher lows in price.
With the Bundestag vote due in Germany on Tuesday, this may have important implications for future market sentiment and price trends.
Going into this important news, traders should be aware of possible support and resistance levels to monitor just in case more directional moves in price develop.
Potential Resistance Levels:
As we have said, so far at least this remains a positive trending price pattern, and despite last Monday’s initial weakness, price action overall was constructive. This saw a rally develop from Tuesday’s 22240 (March 11th) low, as once again, buyers were found at a higher level than before. As the chart above shows, the earlier low was at 22111, on February 21st.
This upside move in price now shifts the focus for traders to a possible resistance level at 23474, which is the March 6th all-time high. Having held before this level will likely need to be broken on a closing basis, if a more extended phase of price strength is to possibly emerge.
Closing breaks above this 23474 all-time high, could trigger continued price strength, which in turn, might open potential for moves towards 23944, which is the 38.2% Fibonacci extension of the March sell-off (23474 on March 6th to 22240 on March 11th) and if this gives way, even towards 24234, which is the higher 61.8% extension level.
Potential Support Levels:
Any negative reaction to Tuesday’s vote, may see downside pressure build and as the chart above shows, the first support could prove to be 22766, which is equal to half of last week’s price strength. This level giving way on a closing basis, might highlight signs of increasing selling pressure and the possibilities for further price declines.
However, if closing breaks below 22766 do materialise then the last correction low from March 11th at 22111 may still be more important to traders.
Closes below this level may show that buyers of the Germany 40 index are no longer willing to buy at higher price levels for the time being, which in turn could lead to a deeper phase of price weakness and retracement of the December 20th 2024 to March 6th 2025 advance.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.