Two trades to watch: DAX, WTI oil

Dax rises post election and as Evergrande fears ease. WTI oil trades at 2 month highs.

Germany

Dax rises post elections, Evergrande risk eases 

German election results show a narrowing win for the centre left SPD party. However, coalition talks will begin. SPD leader would need to form a coalition with FDP and the Greens. They differ on several critical issues. 

Angela Merkel’s SPD party could still hold onto power if they collaborate with the FDP and the Greens. 

Talks top form a new government could go on for months. However, the inclusion of business-friendly FDP soothes concerns over substantial regulation. 

The broad mood in the market also supports gain in equities as Evergrande fears ease. 

Learn more about the Dax 

Where next for the Dax? 

Last week the Dax slipped to its 200 sma on the daily chart before rebounding higher.  

The Dax is looking to retake the 50 sma at 15700. The MACD appears to be forming a bullish crossover, supportive of further upside. 

 A break above this level and 15765 last week’s high and the falling trendline support could see the index look to target 16000 once again. 

Failure to retake the 50 sma could see the price test 15450 September 9 low ahead of before bringing 14950 the 200 sma back into target 

 

Oil trades at 2 month high 

Oil prices are on the rise for a fifth straight day amid supply tightness and draws on inventories. US inventories ae at the lowest for two years. 

Rising gas prices are also helping drive oil higher as oil becomes a comparably cheaper alternative for power generation. 

OPEC members are also struggling to raise output owing to under investment or maintenance delays from the pandemic.  

Learn more about trading oil 

Where next for WTI oil? 

Oil prices continue to rebound from the August low of 61.72, building on gains from the previous week. 

Oil is facing some resistance around 75.00 amid multiple top formations. 

The RSI is supportive of further upside whilst it remains out of overbought territory.  

Clearance of 75.00 could see the price test 76.64 and head towards 80.00. 

Failure to clear 75.00 could see 74.00 the July 30 top over support ahead of 73.00 the September 15 high. 

It would take a move below 69.50 around the 50 &200 sma to negate the near term up trend. 


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