Dax Technical Analysis 13/02/2017

Good morning traders!

Wolfgang Schäuble is a great character, rarely one to back away from a fight, even if the person he is fighting with is the President of the US.

From my understanding of the latest sparring session, the US believe that Germany is exploiting the weakened Euro to boast a record surplus of around €250billion. The US believe that if a country has such a surplus then their currency would skyrocket making it harder to export abroad. The subsequent reduction in demand, based on the higher cost, would bring back the import: export ratio closer to equilibrium. However, German does not have their own currency. So recently US came out saying they would like to introduce a tax on imports (20% I believe) from countries in which they have a trade deficit (Germany being one). Wolfgang Schäuble’s response was to remind the US that Germany produces high-quality vehicles, machinery, electronic products, chemical goods and pharmaceuticals. He believes that Germany should not be penalised for providing better quality alternatives than those produced domestically in the US. This fighting between the US and Germany as a result of protectionism from the Trump administration, will ultimately threaten relations and create a trade war (another trade war – as if China was not enough). A trade war with Germany, in my opinion, is ridiculous and probably a short-sighted decision because BMW, VW and Daimler have all opened

This fighting between the US and Germany as a result of protectionism from the Trump administration, will ultimately threaten relations between the two countries and create a trade war (another trade war – as if China was not enough). A trade war with Germany, in my opinion, is ridiculous and another poor decision for many reasons, but off the top of my head because BMW, VW and Daimler have all opened big factories in the US, creating over 30,000 jobs, supporting the ailing automotive industry, and when you consider the additional jobs that Germany have created in the US, connected (indirectly) to manufacturing, the number comes closer to 250,000. VW sells more than 500,000 cars in the US, but only manufacture around 14% of those sales in those factories, the majority of the remaining cars are manufactured in Mexico and imported, hence the recent charm offensive from VW.

I believe that Germany will be fine, they are a solid economy with good prospects, so long-term there is plenty of opportunity for growth, but with all the political muscle flexing from across the Atlantic, I suspect there is still the risk of headwinds in the short term. Whilst most economists would agree that a trade surplus is generally a good thing (because more money is coming in, than is going out), they would also concede that there is a risk, because when it exports more goods to a country than it imports, Germany is basically lending money to that country and if the countries default on their balances, then Germany will be left with a lot of bad debt and a hole in their finances.

Dax Daily Chart

Looking at the bigger picture, we are bullish above 11,400 and need to break 11,900 to continue the bullish trend.We posted a doji last week on the weekly chart, so there is still some indecision regarding direction and this can be seen in the sideways price action of the last few weeks. The economic calendar is fairly light today, but keep an eye out for the high impact releases tomorrow.

01 Dax Daily Chart
01 Dax Daily Chart

Dax Hourly Chart

I am currently bullish EURUSD which can often (but not always) point to a bearish Dax. At the moment on the H1 chart, we are posting a double-top around 11710 which is in a previous resistance zone from last week. I am watching for a reaction here. I am looking out for opportunities to sell.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Trading Signals

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I use Telegram messenger to deliver my trading signals and as part of my signals service, I offer a broadcast channel and a signal channel. The broadcast channel is an extension of my website, allowing my members a chance for more detailed analysis, commentary, trade management and regular updates. The second channel is the actual signals channel which provides notifications of the trades I am taking myself (these are not providing financial advice or offering recommendations, simply sharing what I am doing in real time). Example:

Signals Channel, 10.02.17 13:22] DAYTRADE BUY #GER30 @ 11665.85 | SL:11643.32 | TP:11719.37 | 2017.02.10 13:23 (GMT) | ID 60811666

Signals Channel, [13.02.17 07:33] CLOSE DAYTRADE BUY #GER30 @ 11686.85 | PROFIT: 19.65 PIPS | 2017.02.13 07:33 (GMT) | ID 60811666

 

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Dax Support & Resistance

KEY LEVELS
Daily R211753
Daily R111710
Daily Pivot11676
Daily S111633
Daily S211599
200 Day EMA10816
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