DAX 40: INDEX REACHES RECORD HIGHS

Current trend

During the Asian session, the Frankfurt Stock Exchange DAX 40 index builds on the “bullish” momentum formed on Tuesday, testng the level of 18245.0 for a breakout as investors await the publication of new drivers for the movement of the trading instrument.

According to forecasts, the March German S&P Global services PMI may increase from 48.3 points to 48.8 points, and the manufacturing PMI – from 42.5 points to 43.1 points. The EU service PMI may change from 50.2 points to 50.5 points, and the manufacturing PMI – from 46.5 points to 47.0 points.

On Friday, traders will pay attention to statistics on business sentiment in Germany from the Institute for Economic Research (IFO): in March, the business optimism indicator, according to preliminary estimates, will increase from 85.5 points to 86.0 points, and the economic expectations index — from 84. 1 point to 84.6 points, however, the indicator for assessing the current situation may decrease slightly from 86.9 points to 86.8 points. Also during the day, there will be a speech by the head of the German Federal Bank, Joachim Nagel, who can comment on the timing of the European regulator’s transition to the «dovish» rhetoric. Earlier, the head of the European Central Bank (ECB), Christine Lagarde, already tried to warn investors, saying that the regulator cannot make specific commitments and pre-determine the number of interest rate cuts this year, even if it begins easing monetary policy in June.

Support and resistance

On the daily chart, Bollinger Bands are steadily growing: the price range is expanding from above but not as fast as the «bullish» sentiment develops. The MACD indicator grows, keeping a buy signal: the histogram is above the signal line. Stochastic shows similar dynamics but is close to the highs, indicating that the trading instrument may become overbought in the ultra-short term.

Resistance levels: 18300.0, 18400.0, 18500.0, 18600.0.

Support levels: 18200.0, 18088.1, 18000.0, 17908.2.

Trading tips

Long positions may be opened after a breakout of 18300.0, with the target at 18500.0. Stop loss — 18200.0. Implementation time: 1–2 days.

Short positions may be opened after a rebound from 18300.0 and a breakdown of 18200.0, with the target at 18000.0. Stop loss — 18300.0.