DAX: In thin air on the resistance area – UBS column

Review: In the big picture in the monthly chart in the previous month of October, the DAX rebounded upwards at the lower Fibonacci fan in the range of 11,450 points and was able to start a strong upward rally as a result. The drivers were the previous outcome of the US presidential election and positive study data on a vaccine against the coronavirus. The DAX is back in the rising trend channel and well above its 50 and 200 EMA, which is bullish. However, he is also facing massive resistance in the monthly chart, which had persisted in previous years.

Outlook: After the strong price increase of 1,850 points, the DAX is totally overbought in a few trading days and is quoted in thin air below the resistance zone of 13,400 to 13,800 points. The upward momentum has already flattened noticeably. The day before, the DAX went out of business with a small day candle and a small candle body.

The short scenarios: After the strong run-up, it is rather unlikely that the index can break through the resistance zone that has been in place for three years. In all likelihood, the DAX will turn down again and initially approach the lower limit of the rising trend channel with the 50 EMA. If it goes deeper, the 200 EMA would follow as a starting point. Below the 200 EMA, the situation for the DAX could deteriorate again in the long term and the trend low of 11,450 points could be targeted.

The long scenarios: The DAX can continue to grow and the upper limit of the rising trend channel can start at 13,800 points. At this point at the latest, the DAX should turn down again.

Disclaimer: The text is a column of the UBS. 4investors is not responsible for the content of the column and therefore does not necessarily have to agree with the opinion of the 4investors editorial team. Any liability and claims are therefore expressly excluded by 4investors!


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