As we continued to go lower throughout the morning, recording lows at 13700, the DAX rise ended in European trade. This follows disappointing Q2 GDP numbers and depressing employment change data for the Eurozone. This week saw a resurgence of growth fears, providing a preview of potential dangers for the business sector, which the recent results have boosted.
Even if reserves are refilled in line with government targets, according to Klaus Mueller, president of the Federal Network Agency, the nation's energy regulator, Germany won't have enough natural gas to survive through the upcoming winter. Stockpiles are currently two weeks ahead of schedule at 77% capacity. According to Mueller, if Russia entirely cut off the gas supply, gas inventories would only last two and a half months. Mueller made it clear that there is still a lot of uncertainty about how the issue would develop, with electricity rationing still a possibility.
On the business front, Uniper (UN01) stock dropped 7.9% after the German energy giant disclosed a net loss of more than 12 billion euros (USD12.2 billion) for the first half of the year, despite receiving a 15 billion euro bailout last month. The corporation took responsibility for this debacle on decreased Russian gas supply, which compelled it to purchase gas overseas at considerably higher prices. As was mentioned yesterday, the government gave the corporation permission to pass on growing energy prices to customers.
The 14000 psychological level, which has several confluences, will be the focus of attention because it has solid technical obstacles above the current price. At this point, it doesn't appear very confident for a sustained break above (a daily or weekly candle closing).
We recorded four consecutive weeks of positive price action and higher prices from a technical standpoint as the bullish rally gained momentum on Friday's weekly candle closure. Since there was no upward wick on the weekly candle, buyers were in complete command. The inner bar hanging man candlestick from Monday suggested further declines. Still, it was followed by a bullish engulfing candlestick from yesterday that emphasized market uncertainty and the significance of the critical psychological 14000 level. The 61.8-76.4% Fib retracement level, trendline resistance, and the fact that we have been trading below the level since June 10th, 2022, are just a few of our confluences.
On a 1H chart, we can see that support discussed yesterday at 13830-13850 was pushed higher before a new high was made. We aggressively went lower as the European session got underway this morning, shifting the 1H structure to bearish. Currently, our trading is below the 20, 50, and 100-SMA. As our daily candle has closed above the trendline, and we could push higher in the US session, maintaining the weekly trend of higher prices for the index in the US session, We would advise caution about the 1H bearish structure.
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