Bottom line: DAX long term structure continues to remain bearish against 13800 mark. The indice seems to have carved a lower high around 12920 levels on June 08, 2020. Ideally, prices must stay below 12920 and continue lower below 8000 levels.
Fundamental Outlook:
DAX had rallied close to 2.0% yesterday closing in around 12280 mark along with most Global Indices. Believe it or not, yesterday’s rally across risk-assets might be seen as a bull trap. COVID-19 infections have crossed over 10,400,000 and deaths over 500,000.
US in particular and the Asia-Pacific region has seen a dramatic rise in COVID-19 cases over the last few weeks. It could be just a matter of time before DAX along with Dow Jones, SPX500, NASDAQ, FTSE and others face another selloff.
WTI Crude has eased off its highs from $41.60 over the last week along with Brent Crude, which has slipped lower from $44.00 per barrel highs since June 23, 2020. Oil prices may feel renewed selling pressure as the world faces risk of another wave of COVID-19 infections.
Technical Analysis:
DAX continues to remain in control of bears since printing a lower high around 12920 levels. The indice has pulled back since 11600 lows on June 15, 2020; and is trading close to 12290 levels for now. Bears are expected to be back in control and resume lower towards 8000 mark.
DAX had earlier dropped from 13800 through 7950 in an impulse wave. The subsequent counter trend rally was corrective A-B-C, and terminated around 12920 levels. Also note that the correction had reached above fibonacci 0.786 retracement at 12920, before reversing lower.
Further, DAX has dropped from 12920 through 11600 as an impulse, which has been retraced by a corrective rally towards 12600 respectively. Most traders might be preparing to sell again around 12300/400 levels, with stop above 13800 and target below 8000, going forward.
Prepared by
Harsh Japee, Technical Analyst.
DAX Chart
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