DAX Market Analysis, December 2021

DAX Market Analysis, December 2021

07 December 2021Reading time: 3 minutes

November was a double-edged sword for the DAX index - DAX closed the month at -4% but at the first weeks of the month, DAX was putting in all-time-highs on the index. DAX did a break out through the resistance level 16000 and the month seemed to end in green as it historically usually has done. The last week of the month then suddenly changed the picture quite dramatically when worries around a new COVID-19 variant started to emerge. The last week of November, DAX declined over -7%, breaking through exponential moving average EMA12 level. November trading range/volatility was roughly 1400 points or 8.5%

At the moment of writing this analysis on 5 December, it is still unclear whether this new COIVD-19 variant is severe more dangerous than the others and due to this fact, it will probably keep the financial markets unstable until more facts are provided that can get rid of protective measurements and open borders again. The resistance level at 16000 is still a major resistance and also now when DAX trades below EMA12 (15260), it could also provide some resistance and EMA6 (14900) could provide support.

Note: Past performance is not a reliable indicator of future results.

Long term levels of support: 14000, 14900

Long term levels of resistance: 15600, 16000

Below on weekly chart, EMA12 functions as per usual as a support level at the beginning of the month from where DAX pushed up towards and above 16000 level. New COVID-19 news changed the trend sharply at the last week of the month - EMA6 and EMA12 levels gave in left the index in a state of confusion. Monthly pivot S1 (14650) is most likely first support level if DAX continues to decline and respectively EMA6 and EMA12 at level 15600 functions as resistance.

Note also on the daily chart the “fear index” VIX (US volatility index in USD) which is at the time of writing above 30 and is close to levels where DAX has significantly declined. It might be good to keep an eye also on VIX right now at these levels.

Note: Past performance is not a reliable indicator of future results.

Midterm levels of support: 14200, 14650, 15000

Midterm levels of resistance: 15600, 16000

Due to the current market situation, it is hard to take any longer term swing trades - it might be the wisest decision to wait for the technical situation to get more clear and to see if support levels are kept intact or not - or alternatively focus on short term trades only. For longer term swing trades the level 15000 and 14650 are possibly entry levels but be prepared to exit longs if these are broken.

For the short trade, levels 15500 - 15600 are interesting levels for a short entry since both EMA6 and EMA12 and the monthly pivot point can be found here.

Note: Past performance is not a reliable indicator of future results.

Above: DAX average monthly movement - December has historically been positive

Note: Past performance is not a reliable indicator of future results.

Above: McClellan oscillator started to decline at beginning of November, it is functioning as a leading indicator for selling pressure

Note: Past performance is not a reliable indicator of future results.

Above: Split of shares in DAX between those above and below their respective displaced moving average DMA20 averages. The sell-off was quite severe, it was the fastest decline during the last 6 months.

Above: Summary of technical indicators for DAX. Quite clear that we are technically in a strong sell mode.

Note: Past performance is not a reliable indicator of future results.

Note: Past performance is not a reliable indicator of future results.

Note: Past performance is not a reliable indicator of future results.

Note: Past performance is not a reliable indicator of future results.

Above: Historical weekly and daily movements for DAX. Direction is clearly up, historically speaking.

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.

17/01/2022 10:30:33

 

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