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DAX® – Tough Struggle – Breaking out not an easy endeavor – Columns

Tough wrestling – breaking out is not an easy endeavor

The DAX® achieved a new high yesterday with 13,347 points. The chance to break out of the two most recent weekly highs at 13.297 / 13.277 points was therefore given. But a lack of follow-up purchases caused the share barometer to fall back into the range of the two key brands by the end of trading. Ultimately, the series of candles with small candle bodies and below-average daily fluctuations since “BioNTech Monday” continues. Overall, an upside breakout remains an issue. Overall, however, the last two weekly highs only mark the beginning of the important resistance zone, which extends to September at 13,460 points. Market participants are currently paying respect to these horizontal barriers. A sprint over the last-mentioned level is still necessary for a real break. On the underside, the lows on November 19 and 13 at 13,035 / 13,005 points mark the limits of the youngest sliding zone. Against this background, a slide under the brands under discussion should result in a temporary respite. With a 47% bull share among US private investors, the sentiment across the pond remains at quite euphoric levels.

DAX® (Daily)

Chart DAX®

Source: Refinitiv, tradesignal²

5-year DAX® chart

Chart DAX®

Source: Refinitiv, tradesignal²

Historic: 30,000 mark reached

In keeping with today’s Thanksgiving holiday, a follow-up to the Dow Jones®: For the first time in its more than 120-year history, the US standard values ​​recently broke the 30,000 point mark. Thanks to the new record level, one of the absolute core requirements of the Dow theory has been met, according to which the indices (Dow Jones Transportation® and DJIA®) have to confirm each other. In terms of chart technology, the course-setting that has already been cited several times recently prove to be real catalysts. On the one hand, there is the dissolution of the (upward) trend-confirming flag that has existed since September (see chart). On the other hand, the entire setback of 2020 ultimately forms a “V-shaped” price pattern (see “HSBC Daily Trading” of November 18). In the “uncharted territory”, the next start-up targets result in the form of the imputed target price of the flag mentioned (32,800 points) and the 138.2% fibonacci projection of the entire bear market from spring (33,906 points). Either the September high (29,199 points) or the upward gap from the beginning of November (28,902 to 28,495 points) can be used as a hedge on the downside, depending on the risk appetite.

Dow Jones Industrial Average (Weekly)

Chart Dow Jones Industrial Average

Source: Refinitiv, tradesignal²

5-year chart Dow Jones Industrial Average

Chart Dow Jones Industrial Average

Source: Refinitiv, tradesignal²

Bottom formation + high Moentum as course driver

Trend-following momentum investors should take a look at Bloom Energy stock right now, as the stock has very high relative strength (Levy). A strong price development often leads to follow-up purchases. From the technical point of view, such a development is favored by the completion of the bottom formation that has been through since the end of 2018. Previously, the lower reversal at the beginning of the month was confirmed by a textbook pullback to the neck zone of the trend reversal formation. The latest spurt above the October high (USD 23.38) provides further evidence that the paper can continue to capitalize on the bottom formation described above. The next target is around 30 USD. At this level, the summer 2018 high ($ 29.88) coincides with the 161.8% fibonnaci projection of the October dent ($ 30.18). In the long term, the stock could even target its previous record high of $ 38. Trading-oriented investors can close long positions on the basis of the above. Hedge high from October. Strategic investors give their exposure a little more breathing space by stopping the July high (USD 19.67). Please consider today’s US public holiday.

Bloom Energy (Weekly)

Chart Bloom Energy

Source: Refinitiv, tradesignal²

5-year Bloom Energy chart

Chart Bloom Energy

Source: Refinitiv, tradesignal²

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