DAX30: European stocks rose _01/03/2016

Trading recommendations

Buy Stop 9710.0. Stop-Loss 9610.0. Goals 9750.0, 9810.0, 9900.0, 10000.0, 10120.0, 10275.0

Sell ​​Stop 9410.0. Stop-Loss 9510.0. Goals 9350.0, 9300.0, 9200.0, 9150.0, 9100.0, 9000.00, 8800.0, 8700.0, 8600.0


Technical analysis

On the daily chart the price has broken through the upper boundary of the descending channel, it was in December 2015, and the resistance level of 9440.0 (23.6% Fibonacci level).

Fixing prices above resistance levels 9680.0 (EMA50 daily chart), 9810.0 (38.2% Fibonacci level) will increase the upward momentum and send the index DAX30 resistance level 10120.0 (EMA144 on the daily chart and Fibonacci level of 50%), 10275.0 (EMA200).

Rising above these levels is unlikely in view of the downside risks from such fundamental factors as the slowing global economy and volatile financial markets. And the efforts of the central bank is not enough to fracture the overall negative dynamics of the global stock markets.

On the hourly, 4-hour and daily charts DAX30 index indicator OsMA and Stochastic recommend long positions. On the weekly chart indicators also pass to the buyer.

If action by the ECB prove insufficient, then the price will quickly return to a downward trend, and the breakdown level of 9440.0 (23.6% Fibonacci level) will send the price inside the descending channel on the daily chart with a lower limit below the level of 8300.0 near the lows of September 2014.

Support levels: 9440.0, 9400.0, 9300.0, 9200.0, 9150.0, 9100.0, 9000.00

Resistance Levels: 9680.0, 9750.0, 9810.0, 10000.0, 10050.0, 10120.0, 10275.0


Overview and Dynamics

At the last G20 Finance Ministers Summit in Shanghai was not reached significant agreements on the stabilization of the international markets and stimulate economic growth. Among the G20 countries, there is no clear joint plan to resolve the current situation of the global economy slowing down.

The gloomy global economic outlook, drawn at the meeting, the deteriorating economic situation in most euro area will reinforce the ECB's tendency to further stimulate economic growth and inflation in the euro area.

Yesterday the president of the Federal Reserve Bank of New York William Dudley said that the downside risks to the US economy are rising and the Fed should keep the target range of the interest rate of 0.25% -0.50% with no change in mean reduction in inflation expectations. Dudley's words only confirm the increased risks to the global economy.

Despite a stream of negative data from the euro area in recent days, European stocks rose. It seems the more negative news coming from the euro area, the stronger the growing confidence of the market participants regarding the expansion of QE programs in the Eurozone at the upcoming ECB meeting on 10 March.

The data published previously confirmed the deterioration of economic conditions in the euro area. Thus, released yesterday, annual CPI in February moved into negative territory and were worse than expected (-0.2% vs. 0.0%).

Released today the business activity index in the manufacturing sector in Spain, Italy and France also turned out to be worse than forecast in February.

According to the presented data last week, the index of economic expectations and business optimism from the IFO in February fell in Germany. Business climate index, sentiment and optimism in the economy, as well as consumer confidence in February also fell (0.07 / 103.8 / -8.8 vs. 0.28 / 104.4 / -6.7, respectively).

Thus, the emerging economy of the Eurozone conditions is reason to believe that the ECB will significantly expand the program of quantitative and qualitative easing in the Eurozone at a meeting on March 10 increased.

And it will give impetus to the upward European stocks, including index DAX30.