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September 27, 2021

Trading American And European Indices After Big News

Frank Cabibi

9/27/2021

Election results in Germany has German equities mostly flat on the day as investors are watching the Social Democratic Party take the lead in the polls. In Washington D.C., legislation is toiling to raise the US's debt limit, pass Biden's agenda and avoid a government shutdown from defaulting on federal aid with hundreds of thousands still out of work.

Our outlook

Both indices are stagnant right now, but the fears in the US over the weekend might have subsided for now. I think this week will be pretty volatile for global equities markets especially in the US and Europe. The best way to trade these indices is probably on short term momentum, or intraday momentum. The tight election race in Germany and the fears of a shutdown in the US seem like they could have day-to-day catalysts. Looking for technical setups on the 4H and 1D seem like the best move here.

Trade Setups

SPX500

SPX500 is making higher lows and highs on the 4H chart which could be a good sign that the market wants to test resistance around $4489. Support lies around $4423.

GER30

Germany's stock index is behaving similarly to the SPX in the sense that they aren't really moving today. The two most recent 4H candles suggest that price wants to move higher, although the index has struggled to break above this falling trend line the all of September so far.

GER30 on the 1D timeframe also shows us the 50 DMA which the index has been respecting as a significant level to break. Here we can see multiple tests on that moving average before the index either breaks above or below. This daily candle looks like price rejected it and might cause a downtrend in the short term. Support is around $15,500.

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