Markets

DAX outlook for Thanksgiving week

There cannot be strong movements every week. Investors found out what a quiet week looks like in this one. With only 240 points of fluctuation spread over the week, the volatility was lower than on some other individual days of this month.

The week got off to a positive start and started with a small gap in the course, which, however, was closed very dynamically in the morning. Then there was another report about a potential Covid19 drug, which stimulated the markets. Moderna showed that their research in clinical test study 3 achieved an effectiveness of 94.5 percent. A dynamic price increase was the result. This only just missed the high of the previous week, which also triggered a rally after such a report (here it was BioNTech).

This movement was hardly sustainable, because the surcharges had already been worked off by the end of trading. In the following days, there was always an exchange of blows between establishment over 13,200 and approach to the 13,000 region. For the most part, however, the index stuck in exactly this range, causing investors to feel a kind of autumn fatigue.

Review of the DAX week Review of the DAX week

There was a lack of momentum in the background of technical trading. The quarterly season is nearing the end, there was no accumulation of appointments from the economic calendar and there was little movement on the subject of the presidency handover in the USA.

DAX trading days of KW47 DAX trading days of KW47

The DAX rose by 61 points in XETRA trading from Friday week 46 to Friday this week, but from the first note on Monday it lost 33 points. Small course differences emerged that hardly need any further comment.

Will the situation change in the new trading week?

Due to the upcoming public holiday in the USA, on which the traditional Thanksgiving festival is celebrated, volatility could remain low. Nevertheless, a look at the possible breakout levels is necessary in order to end this market phase and also for range trading to be prepared accordingly in this market phase.

At first glance, I use the medium-term chart image and sketch the following range based on the price movements of the last three weeks:

DAX range for the past 3 weeks DAX range for the past 3 weeks

An outbreak of this should generate momentum and thus further procyclical momentum to generate. If the index slips below 13,030 or the round 13,000 mark, in my experience there are enough stop orders in the market to generate a rapid movement of 100 points. Likewise on the upside, where a break of 13,300 could also squeeze towards the all-time highs.

In the short term, I then approach the current price level using trend lineson which the market was oriented in several ways:

Search for the next DAX signal Search for the next DAX signal

Corresponding signals can be derived from this, which last for hours and possibly even days. In detail, when the 13,170 was broken, the GAP edge at 13,201 was the first target and, with momentum, the weekly high.

Often a chart like this looks like a triangle, from which the triggers for further short-term trades can be derived.

For example, if the red downward trend line breaks first in the following chart, there is a potential of 40 points up to the starting point of the line and thus the larger trend line on the chart just shown:

Trend lines in the DAX as a triangle Trend lines in the DAX as a triangle

The same setup also applies to the underside – a break would generate potential up to the starting point of the line and there, in turn, the larger range edge can be found.

Ultimately, this is how the time levels interlock. In the live trading room I present this just as practically as in my daily market preparation.

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The coming trading week has more dates in store again. We start with the purchasing manager from Germany and the Markit PMI overall index at 9.30 a.m. on Mondays and add the same data for the EU at 10 a.m., 10.30 a.m. for Great Britain and 3.45 p.m. for the USA. In between, the Chicago Fed Activity Index 2:30 p.m. and various speeches by bankers are relevant.

The GDP from Germany will be reported on Tuesday at 8 a.m. The ifo business climate index follows at 10 a.m. and the Consumer Confidence Conference Board from the USA at 4 p.m.

For Wednesday, 2.30 p.m., you should be ready for incoming orders for durable goods and the income and private expenditure of US citizens, in addition to the gross domestic product price index. Due to the upcoming US holiday, the US initial claims for unemployment benefits will be brought forward at 2:30 p.m., the University of Michigan consumer confidence at 4:00 p.m. and the FOMC minutes at 8:00 p.m.

Thanksgiving is the US holiday on Thursday. The Gfk consumer confidence comes Thursday 8.00 a.m. before the start of trading and 1.30 p.m. the ECB accounts are the only highlights.

For Friday only the CPI from Japan is on the agenda and 11.00 a.m. the EU business climate index.

All forecasts for these dates are listed in the following table:

Economic dates of KW48 Economic dates of KW48

I wish us all the best in further trading in autumn. Your Andreas Bernstein (Bernecker1977)

Feel free to check out the trading chat for more opinions

or in the forum at:

https://www.ariva.de/forum/2020-qv-gdaxi-dj-gold-eurusd-jpy-566939?page=777#jump28422920

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