Two trades to watch: DAX, Gold

Dax rises as market mood improves. Gold picks up from 4 week low ahead of data, Fed Powell.

Gold 5

Dax rises as market mood improves

The Dax, along with its European peers, is moving higher reversing a sharp selloff in the previous session, on Omicron fears and after a surprisingly more hawkish Fed.

Today BioNTech’s chief executive sounded cautiously positive over the joint Pfizer vaccine’s ability to protect against severe illness from Omicron.

German retail sales declined -2.9% YoY in October, down from -0.9% decline in September and worse than the 2% forecast as surging inflation hurts consumer spending.

Manufacturing PMIs are due to be released. Activity in the manufacturing sector has remained resilient despite supply chain issues and part shortages.

Learn more about the DAX

Where next for the DAX?

The DAX is attempting a rebound from yesterday’s almost 2 month low of 14917. However, the picture on the 4 hour chart is still quite bearish.

The 50 sma crossed below the 200 sma in a death cross bearish signal, however the bullish crossover on the MACD is keeping the bulls optimistic.

Buyers need to retake 15460 the late November high, opening the door to the 50 sma at 15725 and the 200 sma at 15826. A move above here could negate the near term downtrend.

Sellers will be looking for a move below 14917 yesterday’s low to test 14812 the October low and a level which was also important in May. A move below here could spark a deeper selloff.

DAX chart

Gold picks up from 4 week low

Gold is edging higher snapping a two day losing streak amid high levels of volatility.

Oimcron fears failed to boost the safe haven which dropped sharply after Fed Powell surprised the market with a more hawkish tone.

Fed Chair Powell suggested that inflation may not be as transitory as initially believed and that the tapering of bond purchases could be faster, meaning rate hikes could start sooner. This is bad news for non-yielding gold

US ADP employment data is due, along with ISM manufacturing data and another appearance by Fed Powell before Congress. Gold will be watching closely for further clues as to the timing of the Fed's next move.

Where next for Gold?

Gold has been falling lower after reaching resistance at 1877 mid-November. The fall lower found support at 1770 a 4 week low.

Whilst the price has picked up off the low, the RSI remains below 50. Any meaningful recovery will will need a move over strong resistance at 1792 the confluence of the 50 & 200 sma ahead of 1800 round number.

A meaningful move below $1770 will open the door to $1760 the November low and 1722 September 30 low.

 

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