Markets

DAX® price index – price all-time high!?! – columns

Course all-time high!?!

The performance index of the German standard values, which is otherwise scrutinized at this point, has given itself a well-deserved break in the course of the week so far. From an analytical point of view, this gives us the opportunity to take a look at the DAX® price index – without taking dividends into account. A new record level is (still) a long way off, but we identified the spurt over the resistance zone at around 5,600 points (38-month line, Fibonacci level, various highs and lows) as an important catalyst in the annual outlook. Together with the course drivers in the form of a consolidation flag and a small “V-shaped” course pattern in the weekly segment, these are currently the decisive driving factors. In perspective, the share barometer should therefore target the previous record level of January 2018 at 6,444 points. A spurt above the 2020 high at 6,137 points would emphasize our base scenario, especially since the price index is currently putting the correction trend that has existed for three years (currently at 6,007 points) up for discussion. On the underside, however, it is important to prevent the above-mentioned bastion from rebounding at 5,600 points, because that would negate our constructive assessment.

DAX® price index (monthly)

Chart DAX® price index

Source: Refinitiv, tradesignal²

5-year chart DAX® price index

Chart DAX® price index

Source: Refinitiv, tradesignal²

Trend reversal thanks to the double floor

At the beginning of December we pointed to the lower reversal in the Stoxx Europe 600 Banks (see “HSBC Daily Trading” of December 1st). The two cyclical lows at 79 points not only define a classic double bottom (see chart), but also ensure that the interim slide below the financial market crisis low of March 2009 (87 points) can be interpreted as a “false break” on the underside . The completed, lower reversal has an imputed connection potential of almost 30 points, so that the lows of 2011, 2016 and 2019 at 115/118 points should only represent transit points on the way north. If the jump over the horizontal resistance zone drawn in the chart succeeds, this positive setting of the course would underpin the described tide change again. The banking sector is currently receiving tailwind from the fresh MACD buy signal and from the break in the downtrend since 2018 in the course of the RSI. The neckline of the above-mentioned double floor with 107 points is predestined for protection on the underside. Such a tight stop-loss also guarantees an attractive risk-reward ratio.

STOXX® Europe 600 Banks (Monthly)

Chart STOXX® Europe 600 Banks

Source: Refinitiv, tradesignal²

5-year chart STOXX® Europe 600 Banks

Chart STOXX® Europe 600 Banks

Source: Refinitiv, tradesignal²

The years teach a lot …

… what the days never know. This quote is ultimately a plea for investors to regularly deal with high time levels. Investors are often rewarded with an additional gain in knowledge (see annual chart of the Telekom share). The last five years have all been characterized by small candle bodies, ie small changes between the opening and closing price. The last four year-end prices were also at almost the same level. And then there is the youngest annual candle, which is encouraging with its striking lower shadow by confirming the horizontal holding zone at EUR 12.72 / 12.60. The price development of the last few years can also be interpreted as a trend-confirming flag (see chart). A spurt above the correction trend since 2017 (currently at 16.40 EUR) – synonymous with the “bullish” dissolution of the consolidation pattern described – would therefore provide an important investment buy signal. If the outbreak succeeds, there is an imputed connection potential of around 20 EUR. This would generate an early signal for overcoming the ultimate resistance zone between around EUR 17 and EUR 18. The latter would in turn complete the bottoming out that has been going on for 20 years.

Deutsche Telekom (Annually)

Chart Deutsche Telekom

Source: Refinitiv, tradesignal²

5-year chart Deutsche Telekom

Chart Deutsche Telekom

Source: Refinitiv, tradesignal²

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