Bottom line: DAX long term bearish structure remains bearish until prices stay below 13800 levels. Bears remain poised to resume lower from here and target below 8000 levels and a break below 10165 would confirm.
Fundamental Outlook:
DAX alongside Global Indices outlook remains gloomy, as it trades just below the previous high at 10600 levels. The US and Euro zone GBP figures are expected later this week (US, April 29 and Euro, April 30). The Q1 expectations remain gloomy amidst COVID-19 pandemic and lock down effects. An even worst print would trigger another round of selloff.
Crude Oil prices continue to slide having opened weak yesterday. WTI Crude closed nearly 25% lower around $13.00/barrel, while Brent Crude closed just below the $20.00/barrel, down 10% yesterday. The continued slide has been mainly attributed to the sluggish global demand due to COVID-19 pandemic, despite the production cut (10 million barrels per day) by OPEC.
Gold prices have been trading back and forth the recent highs at $1747, since the last two weeks. The yellow metal has slipped below the $1700 mark today after having tested recent highs last week around $1738. With Fed Interest Rate Decision tomorrow around 02:00 PM EST, we can expect some volatile price action in the yellow metal.
Technical Analysis:
DAX had rallied yesterday by over 2% and closed around 10650, just below the 10800 resistance. A bearish reversal here and break below 10165 would confirm and accelerate lower towards 8000 levels. A print above 10800 levels before reversing sharply lower remains possible, going forward.
Immediate resistance is seen towards 12300, while interim support is now around 10100/50 levels respectively. A break below 10100/50 would confirm a lower top in place around the 10800 mark and that the counter trend rally since 8000 levels is now complete.
DAX has tested just above the fibonacci 0.618 retracement of recent drop between 12300 and 7950 levels. A bearish reversal would remain high probability around 1070/800 levels. Alternately, a break above 10800 levels would open doors to test 11300 levels, the fibonacci 0.786 retracement.
Most traders might be preparing to initiate fresh short positions between 10800 and 11300 levels, with protective stop above 12300 and targeting lower towards 8000 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
DAX Chart
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