Markets

Standstill in the DAX or Christmas rally? Chart analysis for KW50 columns

For several weeks, the DAX has been trying again and again to break through what may be the last resistance zone before the all-time high. This week, too, a promising attempt started, but it failed again.

On the first two days of the trading week, the DAX was still below 13,300 points and had not quite reached this mark in the high. The aspiration on the upside was evident, however, especially as Wall Street hit new record levels. In particular the Nasdaq benefited and the anticipation of two major IPOs inspired investors to buy shares.

Both so-called IPOs were ultimately successful. With DoorDash, a food service provider stepped on the floor that, like Delivery Hero, also reaches consumers in a lockdown. On the first day of trading, the share was quoted at a premium of 85 percent and thus also pulled the stocks from Germany – Delivery Hero and HelloFresh – up with it.

The second candidate was Airbnb. With the online brokerage of holiday apartments, a permanent area has established itself in recent years apart from the hotel chains and package holidays. Despite Corona the mood was almost euphoric to jump on this trend. On the day of the initial listing, the share rose by as much as 120 percent.

This gave the DAX a brief impetus and impulsively reached the previous month’s high on Wednesday. Sales followed directly there, which then led to a return to the range below 13,300 points on Thursday:

DAX failed at the previous month's high DAX failed at the previous month’s high

It was not only touched, but went through completely on Friday:

An eye on the DAX range An eye on the DAX range

Wednesday’s rebound turned into the ECB meeting on Thursday accelerated again. Here the monetary authorities released an additional 500 billion for the PEPP bond program, but a higher sum was expected on the market. Friday then caused further uncertainty in connection with the rising Corona numbers and brought the DAX directly to the lower range edge.

The trend from Wednesday cannot be overlooked:

DAX trend since Wednesday DAX trend since Wednesday

The index thus closed in the red and had more minus than plus days this week:

DAX review of trading week 50 DAX review of trading week 50

Has the end-of-year rally come to an end?

Interesting is the index’s repeated efforts on the upside with no momentum in the breakout:

Failed attempts by the DAX Failed attempts by the DAX

In this area, at 13,460 points, is also the high from September, which outlines the upper limit of the resistance zone.

In the large chart image, this area further separates the index from the all-time high:

Big picture in the DAX before the all-time high Big picture in the DAX before the all-time high

The lower range is certainly in the short term-Edge to be noted. If the index falls below this range, which is closely related to the psychological 13,000, further dynamic charges are very likely from my point of view and the end of the year could be red.

In combination with the downward trend shown since Wednesday, I am speculating on a reversal as a further correction:

DAX correction target at the start of the week DAX correction target at the start of the week

The Fed meeting in the new week or the agreement on a US rescue package could possibly generate impetus. Accordingly, I prepare each trading day individually.

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The economic dates of week 51/2020 are once again decisive before the first trading-free days arrive in the actual Christmas week.

Monday starts with the Tankan report from Japan and industrial production from Europe.

More data from England on the labor market will be released on Tuesday. With the unemployment rate and the average income, the first data after the recent Brexit talks with Brussels could cause volatility. 3.15 p.m. it is still important to watch out for US industrial production.

Wednesday provides more data from England, such as consumer prices and retail prices at 8:00 a.m. The Markit PMI and purchasing managers index from Germany follow at 9:30 a.m. The same dates are on the agenda at 10 a.m. for the EU, 10.30 a.m. for Great Britain and 3.45 p.m. for the USA. The most important date of the week – the FED interest rate decision – takes place at 8:00 p.m.

Thursday will be the EU consumer prices at 11.00 a.m. and the Bank of England’s interest rate decision at 1.00 p.m. 2.30 p.m., as we do every week, we look at the initial jobless claims in the United States.

Friday will host the Bank of Japan’s interest rate meeting. At 8 a.m., producer prices from Germany and retail sales from England follow. At 10 a.m. we can look forward to the last ifo business climate index of the year and thus to the assessment of the future situation of our companies.

You can find all forecasts of the data mentioned in the following overview:

Economic dates of week 51/2020 Economic dates of week 51/2020

I wish us every success in the week leading up to the fourth Advent. Your Andreas Bernstein (Bernecker1977)

Feel free to check out the trading chat for more opinions

or in the forum here on ariva:

https://www.ariva.de/forum/2020-qv-gdaxi-dj-gold-eurusd-jpy-566939?page=808#bottom

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