Bottom line: DAX long term structure remains bearish against 13800 resistance. The indice has managed to carve yet another lower high around 13450/500 mark. Bears might remain inclined to keep prices lower from here and push towards 7950 over the next several weeks.
Fundamental Outlook:
DAX had pushed through 13450 highs early this month, before facing selling pressure. The indice trades close to 13200 levels as we prepare to publish and would be taking cues from global indices Dow Jones and SPX500 over the next several weeks. It would be interesting to see if DAX manages to push through its 13800 February 2020 peak.
WTI Crude prices have remained under pressure since hitting highs at $43.75 around August 26, 2020. The recent volatility in global markets might have raised concerns over demand. If risk aversion continues further, the commodity might come under renewed pressure around $41.00/41.00 levels.
Gold prices have gained traction since yesterday as the yellow metal trades $1965 today. US Dollar remained under pressure against Japanese Yen and marginally against EURO, Aussie Dollar and Kiwi. This has helped the yellow metal push through one week high around $1965/66 mark.
Technical Analysis:
DAX has managed to carve a lower high around 13450/500 levels and reversed lower. After hitting lows at 12750 mark on September 04, 2020 the indice has produced a corrective wave. Bulls managed to print 13338 highs yesterday before giving in, and the indices trades around 13182 for now.
DAX wave structure continues to encourage bears since 13800 highs in Feb 2020. The drop between 13800 and 7950 was sharp and an impulse wave. An impulse wave sub-divides into 5 waves, which is ideally followed by a corrective wave (sub-divides into 3 waves).
DAX has managed to produce a corrective wave since 7950 lows in March 2020. The counter trend rally had reached up to 13450/500 levels on September 03, 2020. Bears might have regained control since then, as indice reversed sharply through 12750 lows before pulling back.
Also note that counter trend rally potentially terminated just above fibonacci 0.88 retracement levels of the earlier drop between 13800 and 7950 respectively. High probability remains for a bearish resumption from current levels.
Most traders might be preparing to initiate fresh short positions around current levels (13200), with protective stops above 13800 and potential targets below 7950 going forward. Only a break above 13800 would change the bearish structure.
Prepared by
Harsh Japee, Technical Analyst.
DAX Chart
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