DAX surges from its lows, but runs into resistance
The DAX has enjoyed an impressive bounce recently, but can it keep the upwards momentum going?
DAX bounces from March lows
The DAX has bounced strongly from the lows of March, but now we must closely watch the 10,200 area. This was the low from late 2018, which formed the support level for the index’s bounce into 2019. Having moved back to this level, the price has now encountered resistance. A turn lower from here raises the prospect of a move back towards 8400.
Alternatively, a weekly close back above 10,200 brings 11,260 into view, the support level from March and August 2019, and would mean the index is still down 18% from its 2020 highs, but 40% up from its lows for the year.
Short-term breadth has soared, with the percentage of stocks above the 20-day simple moving average (SMA) hitting a peak of almost 90%. However, it has now reversed and fallen back below the one standard deviation of 77.3%. This kind of movement in breadth has marked at least a short-term high. In any case, after a surge of around 2000 points, some near-term weakness would not be surprising.
Short-term upside for the DAX?
All 30 constituents of the index are below their 200-day SMAs, something that happens only rarely. There could be some short-term upside from here, even if the bounce eventually gives way to more downside.
Unsurprisingly, we saw a huge spike in DAX constituents at 100-day lows in March. Again, near-term risk-reward tends to favour the bulls, at least in the short term. Whether this continues to provide a foundation for a longer-term rally remains to be seen.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.