Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

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 Source: Bloomberg

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.

DAX weekly price chart Source: ProRealTime
DAX weekly price chart Source: ProRealTime

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.

DAX 20 day chart Source: indexindicators.com
DAX 20 day chart Source: indexindicators.com

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.

DAX 200 day chart Source: indexindicators.com
DAX 200 day chart Source: indexindicators.com

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.

DAX 100 day low chart Source: indexindicators.com
DAX 100 day low chart Source: indexindicators.com

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

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.