Bottom line: DAX long term structure continues to remain bearish until prices stay below 13800 resistance. The indice might have carved a lower top around 12900 levels on June 08, 2020 and bears might remain poised to continue lower.
Fundamental Outlook:
DAX had collapsed almost -7.0% early this month, along with its peers the Dow Jones and SPX500. The indice had collapsed from 12900 through 11600 before finding some support. Risk sentiment has whipsawed this month, with a day of rally followed by collapse the other day.
Bottom line: Fears of another wave of COVID-19 infections in the US and other countries remain high. A V-Shaped economic recovery might still be far from reality. Geo political tensions are rising amidst the border dispute between India and China, and trade war between US and China. Knowing how fragile the markets remain, a dramatic bearish reversal cannot be ruled out.
Gold prices rallied through $1763.00 yesterday, threatening to break above $1765 highs. The metal may gain further if US Dollar continues to drop (DXY had dropped nearly -0.70% yesterday). WTI Crude trades above $40.00/barrel amidst sustained demand post lock down.
Technical Analysis:
DAX might be back in control of bears since 12900 highs early this month. The counter trend rally that had begun since 7950 levels in March, might be complete at 12900 levels. Bears could be inclined to continue carving a series of lower lows and lower highs towards 8000 and further.
DAX had earlier dropped from 13800 through 7950 as an impulse wave. The subsequent rally towards 12900 levels has been corrective and might be complete. Also note the indice reversed from just above the fibonacci 0.786 retracement around 12630 levels.
Traders might be inclined to remain short from around 12800/900 zone, with protective stops above 13800 and projected targets below 8000 mark, going forward. Only a break above 13800 would change the bearish structure.
Prepared by
Harsh Japee, Technical Analyst.
DAX Chart
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