Market Analysis

DAX: Have investors been over-optimistic?

After the German benchmark index, the DAX, reached a high for the year towards the end of last week’s trading, the mood on the stock exchange in Frankfurt yesterday was not expected to be bright. The DAX opened negative but was able to gain a few points at the start of trading and briefly touch Monday’s close. However, most of the market was on the spot afterward. With the opening of the US markets, the index fell further.

On Monday, German politicians and the German automobile industry held a car summit in the Chancellery in Berlin. They want to push ahead with the expansion of the charging network for electric vehicles in Germany. For this purpose, a master plan for electric charging stations is to be developed.

However, no clear signal towards e-mobility came from the car summit, and the enthusiasm on the German stock exchanges was postponed until autumn because some investors from the automotive sector had at least hoped for further financial packages from the government for the automotive industry.

The DAX, rebounded in the last few days reaching an annual high in the area of 12412 points before dropping back. If this downward trend continues, the market could reach a critical support zone at 11930 points. If the market falls through here as well, the zones at 11625 points and 11360 points could offer further support. If the market continues to fall, another structural support is likely at around 11105 points. If the market breaks through to the downside here as well, the picture could become completely cloudy.

If the impulses of the G20 summit can encourage the bulls to drive the market higher, then another resistance in the zone at 12552 could follow when breaching the resistance at 12420. If the market crosses that zone with momentum to the upside, then the next structural resistance might wait at 12800 and 12950, respectively. Further up, the August and June 2018 highs in the 13150 zone might be another essential resistance.

The MACD oscillator is in positive territory with the trigger line approaching the MACD line. The histogram is flattening out.


Ger30 - daily chart. Source: ActivTrader

Ger30 Daily Chart | Source: ActivTrader


Written by Daniel Schuetz, External Analyst, ActivTrades

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