Bottom line: DAX long term structure continues to remain bearish against 13800 mark. The indice managed to test resistance yesterday and reached up to 12869, before reversing sharply lower. Bears would remain poised to remain in control from here on.
Fundamental Outlook:
DAX had managed to register an intraday high at 12869 levels, before reversing sharply. The indice closed at 12551, down more than -1.0% alongside the SPX500 and Dow Jones. Asian markets have opened gap down today with Nikkei and Hang Seng trading close to -0.80%, as we prepare to publish.
COVID-19 infections have surpassed 13 million worldwide and deaths over 575,000. The tally rose from 12 to 13 million in just 5 days with a few states in the US being worst affected. India has also been adding close to 25K per day since beginning of July and is now the 3rd largest affected country.
Gold has slipped below $1800.00 mark after touching $1812/13 highs yesterday. The yellow metal might come under pressure as the US Dollar Index might see a surge across several majors. Risk associated currencies like the Aussie Dollar might have topped at 0.7000 handle.
Technical Analysis:
DAX had rallied to 12869 intraday highs yesterday and the rally was threatening to take out highs the June 08, high registered at 12922 levels. At the end of the day, the indices was down over -1.16%, with bears in complete control.
DAX is seen to be testing its counter trend line support yet again, and a break lower would confirm the resumption of the proposed down trend discussed earlier. The indice had dropped from 13800 through 7950 levels as an impulse wave.
The impulse was followed up by a corrective wave that reached up to 12922 mark on June 08, 2020. Also note that the counter trend managed to reach just above the fibonacci 0.786 retracement of previous drop.
Traders might be inclined to remain short from 12900 levels earlier and keep their protective stops above 13800 for now. Potential target might be pointing below 7950 over the coming months. Only a break above 13800 would change the structure.
Prepared by
Harsh Japee, Technical Analyst.
DAX Chart
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