Markets

DAX outlook after the expiry date

A negative weekly balance in the DAX (ISIN DE0008469008 | WKN 846900) indicates further uncertainty regarding the corona development. On the capital market, the focus was also on technology stocks, the US Federal Reserve meeting and the big expiry date.

At first, the DAX started very strongly and was preparing to break out above 13,310 points. A region that has preoccupied us several times and thus represented medium-term resistance. But this breakout did not succeed and during the course of the trading day the DAX fell back into its familiar range, which was outlined in the previous week.

Here he stayed until the meeting of the US Federal Reserve on Wednesday evening. Decreasing volatility, which was even less than 100 points on Wednesday, testifies to reluctance on the capital market.

Immediately after the central bank meeting and Jerome Powell’s words to leave interest rates unchanged for several years and not to launch any further fiscal policy programs for the time being, the stock market was disappointed as further steps to support the economy were expected. There was a slight sell-off and thus a break in the DAX range on the lower side at the start on Thursday. In the end, this turned out to be a “bear trap”, because after one hour of trading the range was recaptured and the DAX was back above the 13,120 range, limiting the primary trading range of previous weeks.

The expiry date changed little about that. After a return to the range of up to 13,263 points, there were new distortions at the end of trading and thus to a close at the lower range edge. The week couldn’t end more exciting:

Weekly DAX course with breakout attempts DAX weekly course with breakout attempts

The two escape attempts are optically marked and confirmed the range. The DAX apparently felt at home in this until it fell. All closing prices on the trading days varied by 140 points and the mean value was 13,200.

DAX trading days in week 38/2020 DAX trading days in week 38/2020

Initially, there was no impetus for a sustainable outbreak. Can these be generated in the new trading week?

DAX ideas for the new trading week

First of all, the resistance has to be worked out again as an important element in the chart image. Above the 13,310, the DAX has recently had a hard time encouraging more buyers:

Current DAX resistance zone 13,310 Current DAX resistance zone 13,310

A breakthrough can directly expose the potential up to 13,460 points, which would then bring us to the September high. Above that, the all-time high is already luring. But realistically, you should remember the big picture in the DAX. In the relationship between the corona low and the all-time high, we are already very far in motion without a major correction:

Look at the DAX Big Picture Look at the DAX Big Picture

If the number of corona cases increases significantly, this correction can be done quickly and violently. After all, 30 million people worldwide are already infected with the Covid19 virus and we are approaching the 1 million mark in deaths. An increase in several European countries is currently not perceived with concern, but ultimately this has an impact on purchasing behavior and thus on the economy. In my opinion, this should also resonate in the back of my mind in short-term trading.

In terms of chart technology, the short-term chart can still be interpreted positively from Thursday morning. We see rising lows and a return to the range outlined at the beginning:

DAX history XETRA until expiry at 5.30 p.m. DAX history XETRA until expiry at 5.30 p.m.

The expiry on Friday’s Witches’ Sabbath after 5.30 p.m. pushed the XETRA-DAX a little lower again and caused it to close at the last low or the range edge. A Monday opening below 13,116 would be another attempt to break this range on the downside. Prices around 13,030 and then around 13,000 would be the scenario.

If we break the 13,000 mark as a psychological mark, many market participants could anticipate this as pointing the way and continue in this direction. If the 13,116 holds and we experience a positive start to the week as in the past few weeks, the range is still the favored scenario and thus the first course at 13,230 to 13,260 points is conceivable.

An exciting start to the week is guaranteed. I would be happy to outline my ideas for you on the individual trading days. Please register here with your email address to receive it.

Which dates should you pay particular attention to in the new week?

The Chicago Fed Activity Index will be relevant on Monday at 2.30 p.m. and another speech by US Federal Reserve Chairman Jerome Powell from 4 p.m. A little later Mr. Brainard, also a member of the Fed’s central bank, speaks.

Jerome Powell can be heard on Tuesday from 4.30 p.m. Before that, EU consumer confidence is on the agenda at 4 p.m.

Wednesday then brings insights into consumer confidence from Germany to the stock marketers. The GfK Institute publishes its data on this at 8 a.m. The purchasing manager from Germany and the Markit PMI overall index follow at 9:30 a.m. The same is published at 10 a.m. at EU level and 3:45 p.m. for the USA.

On Thursday morning 10 a.m., the Ifo data from Germany will be relevant again with regard to the business climate of our companies. A further increase is expected here. 2.30 p.m. the focus is on the weekly initial applications for US unemployment benefits and 4 p.m. further speeches by the US Federal Reserve and Treasury Secretary Mnuchin.

For Friday, we note 2.30 p.m. as the date for incoming orders for durable goods in the USA.

You can find all forecasts for these dates in the following overview:

Business dates in week 39/2020 Business dates in week 39/2020

Start well prepared into the 39th calendar week and thus into the last full trading week of the calendar month September.

Good luck, yours Andreas Bernstein – Bernecker1977

Feel free to check out the trading chat for more opinions

or in the forum in the following discussion:

https://www.ariva.de/forum/2020-qv-gdaxi-dj-gold-eurusd-jpy-566939?page=676#bottom

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