DAX Market Analysis, April 2020

DAX Market Analysis, April 2020

21 April 2020Reading time: 3 minutes

DAX's lowest point during March 2020 was at 8250 which is a decline over -30% from February close (futures declined temporarily below 8000). The monthly MA200 moving average can also be found around 8250, which also functioned as support in the 2011 decline. Also the S&P500 index in the USA tested the same MA200 on the monthly chart from which the index rebounded.

At the end of the month, indexes went into a strong rebound mode and DAX managed to end the month at 9900. The volatility has been historically high up until now when we can see intraday swings where volatility is far lower than what it has been during this decline (this analysis is written 14.04.2020).

The technical situation is still weak and often during such declines, DAX has re-tested the lows a few times before a longer term bottom has been found and turned in to a more permanent rebound, bullish trend. The MA200 on the monthly chart is to be monitored closely. On the other hand, central banks have seriously started stimulating the economy so it remains to be seen, will there be another wave down or are we done with the decline.

The long term DAX trend is still bearish, measured with EMA6 and EMA12 moving averages on the monthly chart. DAX is also trading below both these averages.

Long term support levels: 9300, 8000
Long term resistance levels: 11400, 12330, 13500

Weekly chart below that also shows monthly pivot levels. Monthly pivot is 10150, first resistance level (R1) is 12040, first support level (S1) 8016. DAX is also bearish on the weekly time frame (medium term trend) measured with EMA6 and EMA12 exponential moving average.

Medium term resistance levels: 11100, 12040,
Medium term support levels: 8200, 7500, 6150

The investors’ sentiment in the US is still in bearish territory and the S&P500 index volatility is very high (yellow line).

April has historically been a positive month.

Above: Shares in DAX index split between ones above and below respective 20 day averages (DMA20). The indicator is in bullish territory right now. The last trading days with strong rebound can clearly be seen.

McClellan oscillator is also in bullish mode with a reading of around 100 which has historically resulted in a less strong move upwards.

Summary of technical indicators for shares in DAX index: short term in buy mode when the longer and mid term trend still are in sell mode.

DAX index historical average weekly changes for April and first weeks in May.

DAX volatility is still high although the swings have clearly been declining over the last trading days.

Major world futures: short term trend is buy whereby long term trend is in sell mode.

Note: Please note with respect to the information provided above that past performance of a financial instrument is not necessarily indicative of the future performance of that financial instrument.

 

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.

22/10/2020 06:26:41

 

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