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DAX® – 12,800 points: Today as a stepping stone?

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HSBC Daily Trading

12,800 points: Today as a stepping stone?

Most recently, we highlighted the importance of the old upward trend since December 2018 (on a daily basis at 13,059 points) and the upward price gap from mid-August (lower gap edge at 12,753 points) as a signal generator for further DAX® development. Yesterday we also demonstrated the relevance of the two key brands using the Ichimoku method. Two different methods of technical analysis thus underpin the scope of the two catalysts. Today we want to “go one step further” with the help of another time level, because the DAX® hourly chart also documents the importance of the above. Core support. On the one hand, the 200-hour line (currently at 12,812 points) forms a striking retreat line; on the other hand, the share barometer in the area of ​​the above Gaps a series of hour candles with a distinctive wick. These lower candlesticks demonstrate the supporting character of the smoothing line and the price gap described. So the bottom line is that different methods and different time levels speak in favor of new movement impulses if one of the two guard rails is violated. As a partial success, the DAX® is likely to use the 12,800 mark as a springboard today.

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DAX® (1 hour)

Chart DAX®

Source: Refinitiv, tradesignal

Parallel to 2009?

Technicians like to look for historical comparisons and then use these as a possible blueprint for the current price development. Due to the special character of the stock market year 2020 – a very sharp downward impulse followed by a dynamic recovery – investors looking for matches quickly end up in 2009. From a fundamental point of view, it seems appropriate to look back at the time of the financial market crisis, because in both cases they reacted Central banks around the world with the provision of liquidity – a lot of liquidity. The final sell-off was followed by a similar dynamic upward reaction as is currently the case. At that time the upswing solidified and carried through the whole of 2009 (see chart). If this comparison is actually correct, then the development will be a bit bumpy in the short term, but in perspective the Nasdaq 100®, S&P 500® and the DAX® will be facing a continuation of the latest upswing until the end of the year. The historical blueprint plays the cops into the cards. It may be too early to write off the international stock markets now.

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Nasdaq-100 Index® (Daily)

Chart Nasdaq-100 Index®

Source: Refinitive, own calculations

Speculation on the attack

Yesterday we pointed out the special constellation of the EUR / USD currency pair. As a reminder: According to the weekly CoT data, the extent of speculative EUR long positions has recently reached an all-time high. Never before – and the statistics have been collected since the end of the last millennium – have speculators had larger EUR long exposures! In this extreme position we see a noteworthy warning signal. Our expectation formulated yesterday that against this background the euro should not jump over the massive resistance cross between USD 1.17 and USD 1.20 (initially) and that investors should instead prepare for a short-term EUR consolidation, we would like to use the daily chart today underpin. Both the RSI and the MACD are now showing negative divergences (see chart) – another indication that the EUR rally has reached a certain degree of maturity since spring. The recent lows at around USD 1.17 mark the first pullback zone in this context. Even more important is without a doubt the March high (USD 1.1492), which harmonises perfectly with the 38-month line (currently at USD 1.1491).

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EUR / USD (Daily)

Chart EUR / USD

Source: Refinitiv, tradesignal

You should know this course accelerator

The Plug Power share is developing more and more into a real long-runner (see “HSBC Daily Trading from June 24th and 26th). With the highs from the years 2011, 2014 and 2009 between USD 10.70 and USD 13.50, another, absolutely decisive resistance zone is currently up for grabs. After all, a sustainable leap over these hurdles would complete the long-term bottoming out of the last decade (see chart). In this context, it seems useful to us to take a look at the current sales development. The trading volume has recently increased noticeably and reached levels that were last recorded in spring 2014. Since it is well known that “volume goes with the trend”, this underpins the bulls’ ambitions. If the discussed liberation succeeds, the upward impulse of the last year and a half will experience lasting confirmation. The August 2008 low of USD 18.20 marks the next target. After such a run, however, investors should also pay special attention to money management. In order to preserve the chance of a breakout, the 2014 high of USD 11.72 must not be fallen below.

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Plug Power (Monthly)

Chart plug power

Source: Refinitiv, tradesignal

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