Markets

DAX® – upward gap creates a “swing low”

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Upward gap creates a “swing low”

The DAX® got off to a successful start into the new week yesterday. Yesterday’s upward gap (12,690 / 12,728 points) serves as the most obvious indication of this thesis. The price gains from the beginning of the week have another dimension: Thanks to this development, last Friday’s low (12,540 points) can be interpreted as a so-called “swing low” – a phenomenon which often marks short-term turning points. A jump over the two most recent highs at 12,870 / 73 points or over the 50-day line (currently at 12,885 points) would provide another exclamation point in this context. If successful, the important downward gap of September 21 (12,999 to 13,116 points) will come back into focus. In the long term, this gap must be closed in order to free the German “blue chips” from the lethargy of the last few months and to provide sustainable prospects for the seasonally favorable period of the fourth quarter. On the downside, however, yesterday’s upward gap gives investors the opportunity for close hedging on the downside. Below that defines the above. “Swing low” the next support.

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DAX® (Daily)

Chart DAX®

Source: Refinitiv, tradesignal

20 years of bottoming out …

For the Infineon share yesterday we discussed the jump over the highs of 2018 at EUR 25.50 / 25.76, which is also the highest price of the share since 2002. There is also a classic “V-pattern” on a weekly basis. But the importance of a sustainable spurt above the EUR 26 mark is made clear by a look at the monthly chart of the technology title. After all, this lid defines the neckline of a bottom formation that has lasted almost 20 years (see chart). In other words: if the leap over this key hurdle is successful, the bursting of the technology bubble would be completely forgotten. In addition to the “V formation” mentioned at the beginning, the flag consolidation that has been completed since the beginning of 2018 gives hope that the strategic bottoming will be completed. Additional tailwind comes from the trend-following indicators, where MACD and Aroon recently provided synchronous entry signals. In perspective, the paper should therefore target the lows of the first quarter of 2001 at around EUR 30. From a risk perspective, however, either the most recent upward gap on a daily basis (EUR 24.60 / EUR 24.23) or the February high (EUR 23.07) offer a hedge on the downside.

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Infineon Technologies (Monthly)

Chart Infineon Technologies

Source: Refinitiv, tradesignal

“Morning star” as a course driver

In the past week, the Continental share finally managed to recapture the 38-week line (currently at EUR 86.50). Thanks to this development, the automotive supplier was also able to put the steep bearish trend since November 2019 (currently at EUR 86.75) on record. From the perspective of the candlestick analysis, the last three weekly candles also form a so-called “morning star”. In addition to this positive candlestick pattern, there is a flat flag that has now also been resolved upwards. On balance, the impetus for recovery since March – after gathering strength in the last few months – should now pick up speed again. The MACD is currently doing the same. We would particularly like to highlight the latest entry signal from the trend follower on a monthly basis – at a historically low level! Again, three-digit quotations seem to be only a matter of time. The first real start-up target defines the 200-month line (currently at EUR 107.95). In perspective, there is even a start on the long-term downward trend since the beginning of 2018 (currently at EUR 115.27). As a hedge – depending on the risk appetite – either the recent highs at around EUR 96 or the breakout marks mentioned at the beginning can be used.

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Continental (Weekly)

Chart Continental

Source: Refinitiv, tradesignal

This brand is more important than the all-time high!

The German “mid caps” have been wrestling with the highs at around 27,500 points for four months. During the last two and a half years, the MDAX® has developed several important high points in this atmosphere. On the indicator side, the MACD has just generated a new entry signal. The positive pattern, together with the seasonal tailwind that has now set in, nourishes hopes that the lid will be lifted. For us, this level has a signal character. After all, we consider the 27,500 point mark to be even more important than the previous all-time high (29,438 points). In other words: If you jump over the 27,500 point mark, the reward for your efforts is a new record high – and thus an attempt to reach the 30,000 mark. In order not to frivolously gamble away the discussed breakout opportunity, the MDAX® should no longer sustainably fall below the most recent low of 25,995 points. At this level, the German “mid caps” had recently developed two important lows, the importance of which is also underlined by the 38-month line (currently at 25,725 points).

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MDAX® (Monthly)

Chart MDAX®

Source: Refinitiv, tradesignal

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