DAX hesitates at significant levels

DAX hesitates at significant levels

30. tammikuuta 2018 Autor Tradingportalen

German DAX triggered weakness last week after a failed attempt to find ground above previous highs. Long-term technical trend continues to show signs of hope, and current earning season might result in strength, and if the U.S dollar triggered strength, DAX could potentially be looking at further strength up ahead. In case DAX on the other hand starts showing signs of weakness, breaking support around 12 700, the index could potentially be looking at further lower move…

Last week the German market closed lower, after an irregular development. The index closed on Friday at 13 340.17, after a lower move of -0.7 percent, tightening this years‘ gain of 3.3 percent.

Strong move initiated the past week, after the U.S senate passed a temporary solution for its government funding. Even the German ZEW-index came in stronger than anticipated, further fueling the market with strength.

At the end of the week, a weak U.S dollar, threats on strike from German union IG Metal, as well as profit taking pushed the market lower.

This year alone the U.S dollar has weakened -3.6 percent against the euro, and almost -7 percent since its November high. This lowers German companies’ competitiveness, which is considered to be negative for the German market. At the same time, it could be interpreted as a sign of strength of the economic development in Europe.

The long-term technical trend for the DAX continues to show signs of strength. The 40-week moving average for the index continues to show strength, and the index shows a successive pattern of higher highs and lows.

Weekly chart of the DAX                                                                                                                                     

On the other hand, the DAX continued to consolidate for the past 3 months, and despite the higher breakout last week, the index quickly fell back to its previous area of consolidation.

Despite the failed higher move, the index might give another go up ahead, unless it starts falling short and test support at 12 700, which could potentially trigger a continued lower move.

Moving on to the daily chart below, German DAX triggered weakness when it failed to find higher ground. Support at 13 140 is closely waiting behind, even if 12 700 is considered to be more of an interesting technical support level.

Daily chart of the DAX

Last week‘s high of 13 577 is considered an interesting technical level to keep an eye on. In case the index would find ground above this level, during a time where the index shows relatively high trading activity, the index might be looking at further higher move up ahead.

Moving over to a shorter timeframe, the hourly chart below triggered its first weakness, when support level at 13 520 broke. Further weakness could be in the ball park, in case support at 13 222, and around 13 137 would breaks.

Hourly chart of the DAX                       

Based on a short-term perspective, technical strength could come to light in case resistance at 13 350 would break, potentially opening up for a test and further higher move towards resistance at 13 450, 13 520 and around 13 577.

In a scenario where the DAX starts showing weakness, and break support at 13 222, the index could potentially see further weakness up ahead, opening up for a test of support area around 12 750.

Technically the index shows signs of potential further strength, even if support at 12 700 is located nearby.

 

Important legal information

 

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

 

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

21.10.2019 23:16:25

 

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