DAX Tests 21400 Resistance; Focus on rare metals

Morning Brief – April 15, 2025

US-China Trade Conflict Intensifies

The US continues to apply maximum pressure, aiming to establish a broader trade alliance against China. China, in response, has implemented targeted counter-tariffs and export controls. Market indicators, notably the persistently high VIX and VIX futures, suggest markets expect no swift resolution.

·  Asian shares rose on hopes for US auto tariff exemptions; particularly benefiting Japanese automakers.

·  Market caution persists due to uncertainties around broader US trade policies, notably regarding semiconductors and pharmaceuticals.

·  US and European futures indicate weaker openings, reflecting ongoing recession worries and inflation concerns.

·  Treasury yields stabilized following recent declines, supported by dovish Fed signals on potential tariff-related rate cuts.

·  Dollar weakened, near multi-year lows against euro and Swiss franc, amid reduced safe-haven appeal and rising inflation.

·  UK unemployment steady at 4.4%; wage growth matched forecasts.

DAX Technical Analysis 4 hours

The Germany 40 (DAX) – 4H chart shows continued strength after the sharp rebound from the April lows, with the price currently at 21,208.4, just testing the 100 EMA. This marks a key level where bulls and bears are battling for control following the recent breakout above the 20,474 resistance.

Technical Breakdown:

• Trend recovery: After forming a solid bottom near 18,600, the DAX has staged a multi-leg recovery, reclaiming the 20 EMA and now pushing into a critical confluence of resistance EMAs (50/100/200).
• Price structure: A higher high has formed above the April 10 swing, and the market is now testing to confirm a trend reversal or just a bear market rally.

Indicators:

• RSI (4H): Approaching 70, indicating strong momentum but nearing overbought territory.
• Stochastic RSI: Already overbought, which could suggest short-term consolidation or a pullback, especially if resistance holds.

Key Levels:

Resistance:

• 🔴 21,200–21,400: EMA 100 + recent breakdown area
• 🟠 21,700–22,000: Strong resistance zone capped by EMA 200
• 🟤 22,400–22,800: Next structural level for bulls if rally continues

Support:

• 🔵 20,474: Recent breakout level – must hold for bulls
• 🔵 20,193 / 20,039: Psychological support area
• 🟢 18,928–18,586: Long-term base support

Summary:

The DAX is at a crucial turning point. A sustained break and hold above 21,400 would likely confirm a shift back to bullish structure, opening the path toward 21,700–22,000. However, failure here — especially with overbought momentum indicators — could lead to a pullback to retest the 20,474 zone.

Short-term bias: Bullish but extended – watch for a breakout confirmation or consolidation.

Rare Earths as China's Strategic Leverage

China recently imposed export controls on heavy rare earths, crucial materials used in magnets for electric motors, electronics, defense, and robotics. Effective since April 4, these controls aren't a complete blockade but allow Beijing to manage exports strategically, significantly impacting US high-tech industries. China controls approximately 90% of global production of 17 of these metals and possesses extensive refining capabilities. Although rare earth exports represent a minor share of China's total exports, their strategic importance to US technology sectors positions them as powerful leverage in ongoing negotiations.

Volatility in US Markets Amid Tariff Uncertainty

Despite a strong performance last week, US markets remain volatile, still down significantly since Trump's tariff announcement on April 2, with the S&P 500 down 6%, and Nasdaq and Dow Jones each down about 5%. The weekend brought some relief as smartphones, laptops, and key electronics were exempted from recent tariffs, temporarily benefiting companies like Apple and Nvidia. However, Commerce Secretary Howard Lutnick indicated additional tariffs are imminent, particularly targeting semiconductors, adding to ongoing market uncertainty.

Corporate Earnings Spotlight

Today’s market will closely watch corporate earnings:

• Johnson & Johnson (JNJ): Expected EPS $2.57; anticipated stock move: $5.36.
• Bank of America (BAC): Expected EPS $0.81; anticipated stock move: $2.04. Analysts anticipate an EPS of approximately $0.82, reflecting a modest year-over-year increase. Consensus estimates project revenues around $26.9 billion, indicating a 4% growth compared to the same quarter last year.
• Citigroup (C): Expected EPS $1.84; anticipated stock move: $3.72.
• United Airlines (UAL): Postmarket EPS expectation of $0.80; anticipated move: $6.41.

Oil Price Outlook

Goldman Sachs projects declining oil prices through 2026, citing recession risks and increased OPEC+ supply. Forecasted average prices for Brent and WTI in 2025 are $63 and $59 per barrel, decreasing to $58 and $55 respectively in 2026.