DAX outlook after the weekly minus and touching the 200-day line

The trading week in the DAX (ISIN DE0008469008 | WKN 846900) brought old worries back to the floor. With the increase in the number of corona infections in many countries, fear of a deeper cut in economic interaction is growing. The courses developed accordingly more easily. A harbinger for the end of October?

At first, the DAX week got off to a rather euphoric start and even briefly retook the 13,000 mark. From a purely technical point of view, however, this was no more than closing the price gap, which extended to 13,028 points. Anyone who speculated on this could either generate points in the direction of and away from this mark – my trading example from Monday:

DAX trade on GAP-close MondayDAX trade on GAP-close Monday

From this point on, the DAX started a countermovement that lasted for almost the entire week. It only found its hold on the September low, which was reached dynamically on Thursday:

Look at the DAX on Thursday evening: held low in SeptemberLook at the DAX on Thursday evening: held low in September

Up until Friday, a downward trend could be seen here, which accompanied us from Monday’s high and ultimately capped the DAX:

Trend intact from Monday high to FridayTrend intact from Monday high to Friday

But on Friday this trend broke and the German share index generated a buy signal right after trading started. It even led to over 12,700 points, making up for some of the trading week’s losses:

DAX trend broken after four trading daysDAX trend broken after four trading days

In the end, however, it remained at a week minus of around 2 percent. This put the DAX in penultimate place overall in the ranking of international stock indices (overview from teletrader):

Ranking of the indices in week 43/2020Ranking of the indices in week 43/2020

After this trading week in which there was only one plus day, October slipped back into the minus zone:

DAX weekdays of week 43DAX weekdays of week 43

What can be deduced from this for the further course?

With the countermovement on Friday, the DAX had worked its way into an initial resistance zone. Even if this momentum was corrected at the end of XETRA, a strong recovery trend can be seen from the low point on Thursday:

DAX recovery at the end of the weekDAX recovery at the end of the week

The question for the new week is now whether this DAX recovery can continue at the end of the week. If the index establishes above 12,700 points, the next target is 12,770 to 12,800 as another resistance zone from the previous week:

Two resistance levels in the DAXTwo resistance levels in the DAX

In my opinion, the chart situation would worsen again if we slide below 12,580 or 12,550 points. These were the lows from Wednesday and the week before the major points where movement occurred.

For the big picture, one has to keep in mind that from the September high a downward trend caps the market as a whole and prices below 12,500 points initially generated buying interest when the 200-day line was touched:

DAX Big PictureDAX Big Picture

In the event of strong movements such as an agreement in the US bailout package before the US presidential election, a rapid escalation of the corona infection numbers or a surprise at the ECB meeting next Thursday, such a “big picture” in the DAX should be used as a guide consider.

Speaking of the ECB meeting: In addition to this event, the following further dates are pending in the coming trading week.

First of all – the time change in the USA takes place with a delay, so that from our point of view all US appointments are an hour earlier than usual and Wall Street operates regularly from 2:30 p.m. to 9:00 p.m.

On Monday, the focus is on the ifo business climate index from Germany. It will be published at 10 a.m. together with the current assessment.

On Tuesday, US incoming orders at 1.30 p.m. and Consumer Confidence Conference Board from the US at 3 p.m. are likely to be the dominant topic from an economic perspective.

Wednesday is all about the central banks. First ECB President Lagarde speaks here and later that evening Mr Kaplan from the FED speaks.

On Thursday, the focus will be on the labor market data. First the unemployment statistics from Germany at 9.55 a.m. and then at 1.30 p.m. again the US initial applications for unemployment benefits. Furthermore, the result of the ECB meeting is exciting, which can cause volatility with the statement and the press conference at 2.30 p.m.

The EU unemployment rate follows on Friday at 10:00 a.m. Before that, on the last trading day of the week, the GDP from Germany can be assessed at 8 a.m. and also at 11 a.m. for the euro zone. With the Reuters / Uni Michigan consumer confidence at 3:00 p.m., the data from the USA closes the series of numbers of the week.

Further dates and all forecasts are listed in the following table:

Dates of week 44/2020Dates of week 44/2020

I wish us every success in the new week’s retail business. Your Andreas Bernstein (Bernecker1977)

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