DAX Market Analysis, May 2021

DAX Market Analysis, May 2021

12 May 2021

April was fairly slow and quiet month for DAX after a very strong March. On April 16 and 19, DAX tried to enter into a new leg up but these were sold fast and DAX closed the month at +0.5%. It starts to look like bears are looking for market correction and as we write this (May 5) a small correction is ongoing; May 4 was the biggest negative day for 2021, fuelled by increasing interest rate remarks from US FED.

Looking at DAX monthly chart, trend is still as EMA6 stays above EMA12. DAX is still quite far away from EMA6 (big positive delta, as we mentioned last month) so it is very possible that DAX will seek to test EMA6 either now in May or in June. If May ends at current levels or lower, monthly candle pattern will start to look bearish as April candle formed a ‘shooting star’, often indicting change in market trend.

Long term levels of support: 14000, 13400

Long term levels of resistance: 15000, 15700

Weekly chart below with monthly pivot levels visible. In mid-April DAX started a correction - how big this will be remains to be seen. Middle term trend continues also up with EMA12 above EMA6 and DAX above EMA12.

Current upleg is quite a long one so likelihood for at least ‘medium’ correction (8-10%) is fairly high, as also mentioned in previous monthly analysis.

Medium term levels of resistance: 15400, 15700

Medium term levels of support: 14750, 14150

For a long swing trade, a possible good entry point would be EMA6 line from weekly chart as this has been holding nicely for a long time (EMA6 currently at 14762). For this trade there are several options on which instrument to use, depending on preferred risk level. One option could be:

There are multiple options also for short trade. In April, DAX moved a lot around 15300 which became a clear resistance. If DAX makes again to 15300, this could be a good point for short entry. Here is one possible instrument:

Above: Investors’ sentiment in US remains very bullish with low volatility. This continues to be a possible contra indicator for market correction.

Above: Historically, May has been a neutral month for DAX

Above: McClellan oscillator signals increased risk and reason to be careful as we are below the zero line

Above: Split of stocks in DAX index that are above or below their respective DMA20 averages. Also here we see a red flag as net is below zero.

Above: Summary of technical indicators of stocks in DAX index. Long and mid term are indicating clear buy but short term trends are mixed.

Above: DAX historical weekly and daily changes

Above: World’s main futures continue in strong buy

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.

13/06/2021 08:18:53


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