CDAX® – You must know these hurdles! – columns

December 07, 2020

from Jörg Scherer, Technical Analyst HSBC

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HSBC Daily Trading

You must know these hurdles!

Since mid-November, the DAX® has found it increasingly difficult to make further price gains. A never-ending series of trading days with below-average fluctuation ranges are external signs of this development. In order to escape this sedentary lifestyle, today we are putting the CDAX®, the largest German share barometer on the market, to the test. But there is a much more important reason: The index may provide an early signal regarding the further development of the “big brother”. But first things first: In October the CDAX® pulled back to the cross support from an old trend line (currently at 1,094 points) and the high from April 2015 (1,108 points). This springboard was used impressively, so that the ultimate lid is now available. What is meant are the horizontal hurdles from the high points of the last three years between 1,251 and 1,286 points. A new all-time high would therefore provide a very special investment buy signal. If successful, the next target is derived from the 138.2% fibonacci projection of the setback in February / March (1,482 points). An outbreak of the market-wide CDAX® should also help the German “blue chips” out of their lethargy.

CDAX® (Monthly)

Chart CDAX®

Source: Refinitiv, tradesignal²

5-year CDAX® chart

Chart CDAX®

Source: Refinitiv, tradesignal²

Big change in trend made!

In the meantime, the Freeport share was able to capitalize as planned from the two “hammer” reversal patterns in the 6-month range and from the nested price pattern described at the beginning of September (see HSBC Daily Trading ”from September 11th). The imputed connection potential of USD 9 – derived from the “V-shaped” reversal of 2020 – has even allowed the commodity stock to jump over the multi-year high of January 2018 at USD 20.25. In terms of charting, this setting of the course is tantamount to a very big break, because the price development of the last five years forms a large double bottom. The lower reversal is confirmed by various indicators. The paper continues to have a very high relative strength (Levy). At the same time, the MACD is positioned “long”. In purely mathematical terms, there is now a connection potential of a good 16 USD or a price target in the range of around 36 USD. On the way to exploiting this price potential, the lows of 2010/11 at a good USD 28 set important milestones. In order to avoid the risk of a false breakout in the first place, the share should no longer sustainably fall below the USD 20 mark in the future.

Freeport (Monthly)

Chart Freeport

Source: Refinitiv, tradesignal²

5-year chart Freeport

Chart Freeport

Source: Refinitiv, tradesignal²

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