DAX Market Analysis, May 2022

DAX Market Analysis, May 2022

10 May 2022 from Traders.fi

April closed the month in a technically expected way - EMA12 moving average functioned as a resistance on the upside and EMA12 also crossed EMA6 which turned the long term trend downwards into a bearish flag.

DAX closed the month roughly at -3% and the monthly S1 pivot point (seen in the weekly chart) provided support which also was tested. Last month we mentioned that historically markets quickly rebound after starting a war but that probability does not seem quite likely now and worries about a rising inflation and interest rate pressure are a heavy weight on the markets. Also issues in logistics and the lack of components could have a further negative impact on companies revenues. Right now the long term trend is bearish for the first time since the beginning of year 2020, when DAX after all quite soon after the bearish cross turned back into a bullish trend within a few months.

Note: past performance is not a trustable indication for the future

Long term support levels: 12185, 13000, 14030

Long term resistance levels: 14500, 14650, 15150

Below the weekly chart - with the exception of the last week in April, the weekly candlestick technical pattern was bearish where EMA6 and EMA12 functioned at first as support and then turned into a systematic resistance once DAX closed below.

Our message is as boring as previously - the weekly chart EMA12 + EMA6 could be a good indicator to follow and to use them for entering positions; look to enter short when below and when DAX retrace towards the moving average. The pivot points S1 and S2 on the weekly chart are most likely functioning as more important support, that is look to exit shorts is a good option to consider if and when these pivot points are reached.

Note: past performance is not a trustable indication for the future

Mid term support levels: 13050, 13570, 14100

Mid term resistance levels: 14140, 14330, 14600

For a Long swing position EMA6 and EMA12 are to be monitored - if DAX climbs above these averages, these EMA -levels should function as support on pullbacks if the trend is to continue upwards. Besides that, as long as EMA12 is below EMA6, our message is to be cautious with long term swing positions. Preferably EMA6 should be above EMA12 for a more sustainable long term bullish trend. At the moment a potential long swing trade would be if for example the monthly pivot point S1 at 13574 and a exit around the EMA levels. Example of a long swing instrument TLNG DAX V1340

For short trade, the setup is more straight forward - both EMA6 and EMA12 are good entry levels if they seem to give resistance for the index when they are tested. Example instrument: TSRT DAX V1302

Note: past performance is not a trustable indication for the future

Above: DAX average monthly movement - historically April has been neutral

Note: past performance is not a trustable indication for the future

Above: McClellan oscillator is surprisingly in neutral territory

Note: past performance is not a trustable indication for the future

Above: Split of shares in DAX between those above and below their respective DMA20 averages. The indicator is still very negative, also suggesting possible rebound.

Above: Summary of technical indicators for DAX. The technical picture is unclear.

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Note: past performance is not a trustable indication for the future

Above: Historical weekly and daily movements for DAX.

Important Notice

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the securities, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. Past performance is not a reliable indicator of future performance.

01/07/2022 12:43:12

 

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