Two trades to watch: Dax, Gold
Fiona Cincotta March 22, 2021 7:13 AM
Dax futures slip as Merkel considers extending Germany's lockdown. Gold fails to break above descending trendline, Powell in focus.
Dax slips as Merkel considers extending German lockdown
The Dax continues to fall away from last week’s all time high.
German Chancellor Angela Merkel is considering extending the lockdown in Germany for a fifth month owing to a third wave of covid.
She will meet today with the 16 leaders of the states to decide on the course of action.
The sluggish vaccine rollout is doing little to aid the situation with around just 8% of the adult population vaccinated against covid.
Where next for the Dax?
The Dax hit an all time high last week of 14800 before rebounding lower. The Dax has fallen through its 20 sma on the 4 hour chart and is currently finding support at the 50 sma at 14580, a level which also provided strong resistance on the advance last week.
The RSI is mildly bearish. However bears will need to break down the 50 sma in order to test support at 14400 horizontal support March 10, ahead of 14230 the ascending trendline dating back to pre-pandemic.
However, should the 50 sma hold, bulls will look for a move back over the 20 sma at 14650 before the all time high at 14800 is retested ahead of 150000 key psychological level.
Gold fails to break above descending trendline, Powell in focus
US yields are holding steady around 1.70%, enabling the US Dollar to treat from highs.
Joe Biden is considering a new economic plan including infrastructure spending and tax hikes.
Jerome Powell is due to testify with Treasury Secretary Janet Yellen over the response to the pandemic
Where next for Gold prices?
Gold trades within its descending channel dating back to early January.
The precious metal rebounded off the lower band at the start of March and has been trending higher across the month to date.
However, Gold is under pressure in early trade on Monday after failing to break above the upper band of the descending channel. It has fallen through its 20 sma on the 4 hour chart and has so far found support at the 50 sma at 1730 – the day’s low.
The RSI is heading into bearish territory, although a break through the 50 sma at 1730 is needed in order for the bears to attack 1700 round number and 1685 the low March 5.
Should the 50 sma hold, a clear break above the upper band of the descending channel at 1740 will bring 1755, high 18 March into target ahead of 1760 February 18 low.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.