DAX, Oil Forecast: Two trades to watch

DAX rebounds as Trump hails productive talks (which Iran denies)

The DAX, along with its European peers, reversed course on Monday, recovering from a six-month low after President Trump said he would postpone military strikes against Iranian power plants and energy infrastructure, easing concerns over a deeper oil shock.

Trump also announced “productive” talks with Iran over the weekend, although Iran has denied this. The shift in tone has triggered a sharp reversal in markets, with risk assets rebounding after earlier declines.

Oil prices have fallen sharply, easing pressure on energy costs. This has helped bond yields fall, supporting demand for riskier assets. Prior to Trump’s comments, markets had been pricing in up to three ECB rate hikes this year. However, upside in equities may remain limited until there is clearer evidence supporting Trump’s claims.

Any signs of a ceasefire and a reopening of the Strait of Hormuz could further boost risk sentiment and support a stronger market recovery.

DAX forecast – technical analysis

The DAX ran into resistance at 25,400 and rebounded lower, breaking below its 50 and 200 SMA and multi-month rising trendline. The price rallied into support at 21,860 and recovered higher, pulling the RSI out of oversold territory.

The chart remains bearish. Buyers would need to settle above 23,000, the November low and 23,400, the September low- to put the price action on a firmer footing.

Meanwhile, sellers will look to break below 21,860 to create a lower low, bringing 21,500 into focus and 20,700.

Oil falls as Trump postpones strikes on Iran's energy infrastructure

Oil markets are moving significantly lower, down around 10% in afternoon European trading, after President Trump signalled progress in talks with Iran and said he would delay potential strikes on energy infrastructure.

Trump had threatened such action over the weekend but said that, following “good and productive” discussions aimed at resolving hostilities in the Middle East, he is prepared to postpone strikes for five days, contingent on progress in negotiations. Oil is falling as the risk premium fades.

Whether oil can hold onto these losses will depend largely on how the situation develops. The market remains highly headline-driven, resulting in elevated volatility.

Further signs of de-escalation between the US and Iran could lead to the reopening of the Strait of Hormuz — a key development needed to stabilise energy markets on a more consistent basis.

Oil forecast - technical analysis

WTI is breaking out of its recent range. The price has been trading in a range of 101.50 on the upside and 92.70 on the downside. The breakout of range sees the price heading towards the 100 SMA at 88.60. A break below here opens the door to 86.65, the 23.6% fib retracement of the 119 high and 76,10 low.

Buyers will need to rise above 92.70, the lower band of the recent range, to then look towards 97.80, he 50% Fib retracement and a rise above 101.50 creates a higher high.