Two trades to watch: Dax, Gold

Stocks trade higher whilst gold is under pressure as Biden is set to annnounce a $2 trillion stimulus package

Gold 5

Dax to retake all time high on US stimulus hopes?

  • The Dax is advancing in early trade, along with its European peers, boosted by a firmer finish on Wall Street and better than forecast Chinese trade data.
  • Looking ahead German GDP reading and Biden is set to unveil his stimulus plans, with a package in the region of $2 trillion expected.
  • The larger than initially expected stimulus package could boost German stocks with a presence in the US, such as Daimler share price, Volkswagen share price and BMW share price.
  • Minutes from the ECB meeting will be released later.

Dax technical analysis

The Dax is trading +0.1% at 13975, as it continues to hover around its all time high.

It trades above its 20 & 50 sma on the daily chary and has formed an ascending channel in place since early November, suggesting an established bullish trend. A

The RSI is in bullish territory but still comfortably below overbought conditions, suggesting there could be more upside.

Immediate resistance is seen at 14,000 the psychological figure prior to 14,137 the all time high and the upper band of the ascending channel, before on towards 14,500 round number.

Resistance can be seen at 13774, 20 sma before 13580, the lower band of the ascending channel and 13388 the 50 sma before horizontal support at 13000 comes into play.

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Gold off lows ahead of Powell 
  • Reports that Joe Biden is set to announce a larger than expected $2 trillion aid package a significant top up to the $900 billion package already approved.
  • Gold looks vulnerable to deeper losses as treasury yields and the US Dollar cheer the prospect of additional stimulus.
  • Federal Reserve Chair Powell is due to speak later and could provide fresh direction for gold.

Gold technical analysis

Gold is trading -0.35% at the time of writing at $1838 after its recovery from Tuesday’s weekly low of $1811 runs out of steam around $1850. 

The outlook is bearish as gold trades below its 20 & 50 sma on its hourly chart. The chart also shows that gold broke below its ascending channel dating back to 11th January. Adding to the bearish set up, the 20 sma crossed below the 50 sma.

The RSI is turning to point northwards as the bull attempt a rebound, although it is in bearish territory at 38 is still above oversold territory at 30.

The price has picked up from session lows of $1828 but the recovery attempts could find resistance at the 20 sma at 1847 prior to today’s high and the 50 sma at 1852 prior to horizontal support at $1860.

Immediate support is at $1828, the daily low prior to $1817 low January 11.

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