Summary:
-
Escalating Middle Eastern tensions weigh on stocks
-
DE30 falls below psychological 13000 level
-
Bearish 8/21 EMA cross seen on D1
Despite some mildly positive data from Germany this morning, the DE30 has gotten off on the wrong foot at the start of the new week with the market tumbling by as much as 1.6%. Similar to Friday’s session the declines come from geopolitical tensions in the Middle East with a further escalation over the weekend weighing on risk sentiment. Iranian president Hassan Rouhani has said that he will no longer seek to restore the JCPOA nuclear deal, marking a further deterioration in relations between Tehran and the West.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
The DE30 has tumbled by around 500 points since the drone strike which killed Iranian general Soleimani, with price putting in a double top around 13460 and now trading not too far from the December low of 12881. Source: xStation
With US president Trump doubling down on his threatening rhetoric overnight on Twitter, there’s a real concern that things could get a whole lot worse before they get better and Oil has moved up to its highest level since May in recent trade. Those trading the DE30 could be interested in keeping an eye on crude, given that the oil market seems to be the most sensitive proxy of tensions in the Middle East and therefore could guide sentiment in indices.
The DE30 has exhibited an inverse correlation with Oil since the attack on Friday, and indices traders may want to keep a close eye on crude as a proxy for market sentiment regarding Middle Eastern tensions. Source: xStation
The final German services PMI for December came in markedly better than expected, with a reading of 52.9 comfortably above the 52.0 consensus forecast (prior also 52.0). This is of secondary importance compared to the geopolitical tensions but the DE30 has shown signs of some buying pressure supporting price since its release.
From a technical point of view there are a couple of signs that the DE30 may be turning lower on a D1 timeframe. Firstly, Friday’s session saw a large bearish engulfing candle confirmed as price closed beneath both the 8 and 21 EMAs for the 2nd time in 3 sessions. Perhaps even more importantly, the 8 EMA is now threatening to move below the 21 and a bearish cross here could be seen as signalling the end of the uptrend that has been in place since the start of October.
The DE30 is on the verge of printing a bearish cross in the 8/21 EMAs which could be seen as signalling a change in the prevailing trend. Friday's session also saw a large bearish engulfing candle confirmed on D1. Source; xStation
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
