Markets

DAX® – Top continues to set the tone

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Top continues to set the tone

After the price losses of the last few days – including two downward price gaps – the DAX® did not suffer a new low yesterday. Rather, the lows of the last two days (11,457 vs. 11,459 points) are at almost the same level. Investors should definitely have a stress test of these two lows on their agenda at the end of the week. This results in a possible alternative course of action on the underside: If the German standard values ​​slide below the most recent lows, another procyclical sell signal arises. The DAX® should then quickly exploit the discount potential from the top formation of 1,200 points, which has been discussed again and again, and set its sights on the price target of 11,000 points promptly. On the upside, however, a rise above yesterday’s daily high (11,707 points) would suggest a tentative stabilization. In order to negate the upper reversal, however, a recapture of the above remains unchanged. “Double averages” from the 200-day and 200-week line at around 12,200 points are necessary. Such a liberation is currently wishful thinking.

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DAX® (Daily)

Chart DAX®

Source: Refinitiv, tradesignal

Threatening double top

There is currently an acute double top risk with the Dow Jones®. The two price peaks at 29,199 / 28,958 points have formed the American standard values ​​in the orbit of the previous all-time high from January (29,569 points). With this in mind, a lot is at stake, as the combination of a series of old highs, the 50-week line (currently at 26,558 points) and the September low (26,537 points) acts as the neck zone of the discussed upper reversal. In other words: a break in this bastion completes the trend reversal of the last few months! In the event of a negative course, there is a calculated discount potential of around 2,500 points, which leads to a price target in the range of 24,000 points. On the way to this region, the 61.8% retracement of the spring setback (25,231 points) together with various lows at around 25,000 points and the 200-week line (currently at 24,835 points) mark important intermediate goals. With the quantitative indicators, the MACD is currently threatening to generate a new exit signal. The above The Dow Jones® must therefore defend accumulation support!

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Dow Jones Industrial Average (Weekly)

Chart Dow Jones Industrial Average

Source: Refinitiv, tradesignal

Before double-digit quotations

Trends regularly carry a lot further than investors can initially imagine. The EUR / TRY currency pair can be used as evidence for this thesis. After all, several dynamic trends were characteristic of the development of the euro in comparison to the Turkish lira in recent years. The sprint above the old record level of August 2018 (8.21 TRY) once again served as a catalyst in this context. In the meantime, the all-time high has been expanded to TRY 9.79 – the underlying EUR upward trend is therefore absolutely intact. We therefore think double-digit prices are likely in the next few weeks. A price target of a good 10 TRY results if investors interpret the price development from August 2018 to August 2020 as a trading range between just under 6 TRY and a good 8 TRY (see chart). But even with such a strong trend towards movement, investors should not neglect money management. Depending on the risk appetite, either the previous monthly low (TRY 8.92) or the above. old record high (8.21 TRY) as a hedge on the downside.

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EUR / TRY (Monthly)

Chart EUR / TRY

Source: Refinitiv, tradesignal

Make or break: Before volatility!

Most recently we worked out the strategic guard rails for the VW share based on the monthly chart (see “HSBC Daily Trading” of October 23). Even on a daily basis, the starting position is extremely exciting. The strategic trigger in the form of the low from the end of July at EUR 125 on a monthly basis coincides with the remaining price gap from May 18 (lower gap edge at EUR 123.18). A slide under this bastion would turn the sliding zone into a top formation since May (see chart). The amount would result in a calculated discount potential of EUR 25. A price target of around EUR 100 suggests closing another price gap – specifically the gap of April 6 at EUR 103.26 / EUR 101.90. But also on the upside, an area without a listing plays a key role: Closing the most recent downward gap (EUR 129.60 to EUR 131.68) would ease some of the tension. For traders, however, the auto stock is interesting from another point of view: volatility is currently very low – measured by the ATR and the distance between the Bollinger Bands. This constellation is the ideal breeding ground for a new trend impulse!

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Volkswagen (Daily)

Chart Volkswagen

Source: Refinitiv, tradesignal

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