DAX30 – Technical Outlook | UK Manufacturing Production (MoM)

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Manufacturing Production measures the change in the total inflation-adjusted value of output produced by manufacturers. Manufacturing accounts for approximately 80% of overall Industrial Production.

Last month’s number was 0.2%, an improvement versus the forecast of 0.1%. Furthermore,  it was an improvement compared to the previous month.

UK manufacturing production has been increasing, showing positive signs of the growing economy amidst the pandemic.

The report is due Friday, 11  March at 07:00 GMT.

UK Manufacturing Production (MoM)

Technical Analysis Daily Time frame

Moving Average:

We have two moving averages on the chart- 50 and 200. We have a ‘death cross’ formation on the higher timeframe with 50MA crossing the 200MA moving down. This here signals the sellers’ pressure is more than the buyers’, and the market can trade in bearish momentum.

Relative Strength Index(RSI):

The RSI line recently crossed the lower band(30), signifying an oversold condition. Currently, the RSI line has crossed the middle band, showing a swift change from sells to buys.

Analysis using price action:

From 22nd Dec 21, the DAX30 price has been in a bearish trend with a price cut of 23.72%. The DAX30 formed a high of $16298.50 on 19th Nov 21 before starting to form a swing low at $14908.71.

The price from the low moved up but could not break the previous high and stopped at $16290.44, also forming a double top price pattern. Price from the new high started stepping down, making a series of lower highs and lows. Moreover, the price also broke the major support zone between $15066.41 and $14967.02.

To add more confirmation that the market would trade down, we also had the death cross formation by 50MA crossing the 200MA moving down. Due to the Russia-Ukraine war, DAX30 was also affected, pushing the price down to approximately 10-12%.

DAX30, currently on the higher timeframe, shows buying pressure with the price regaining almost 18.18% from the major structure low of $12425.88.

DAX Technical Analysis Daily Time frame

Technical Analysis 4hr Time-frame

On the 4hr time frame, the 50MA crossed the 200MA, moving up, forming a ‘golden cross’ and signalling a Buy condition. However, there is no clear market structure as the market is in a range zone. Hence, traders are recommended to wait for the price to break the high or low with high momentum before placing their trades.

Potential pivot points using Price Action:

Resistance PivotSupport Pivot
R11.3203S11.3052
R21.3303S21.3001
R31.3354S31.2901

This considerable resistance and support level can enter or exit when approaching future market openings.

Key Trading Recommendation

The UK manufacturing production data is a crucial indicator of the health of the British economy. Furthermore, it has a significant impact on the GBP strength.

However, given the current global situation, it is advisable to avoid entering positions during these news events since the market will have higher than average volatility, meaning that currencies could move in either direction without a definite trend for a short while.

Nitish Vaibhav
Nitish Vaibhavhttp://thetradingbay.com
I am an Entrepreneur. I believe building a Network and staying connected to the world will give you Wealth.

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