DAX rallies around Gilead Corona-treatment drug news – sustainable?

April 20, 2020 10:30

Source: Economic Events April 20, 2020 - Admiral Markets' Forex Calendar

The DAX30 had a solid weekly close, avoiding a drop below 10,000 points. The reason for the gains on Friday was the news that Gilead Sciences is making progress in finding a treatment for Coronavirus patient, reporting that a Chicago hospital treating coronavirus patients with Remdesivir in a trial were recovering rapidly from severe symptoms.

As a secondary driver, there was the market's hope of a soon coming re-opening of the US economy, fuelled by US president Trump in a Thursday evening speech which put pressure on state governors to end their lockdowns.

In our opinion, traders should be really careful in regard to the sustainability of this move, since "vaccine speculation" could quickly turn out to be a false hope, resulting in a sharp decline in Equities.

However, in the short-term, we technically stay positive as long as the German index holds above 10,300 points, with 10,830 and 11,000 points as targets on the upside.

This technical picture also fits into the bullish seasonal window for the DAX30 CFD: between April 8 - 27, the DAX, in 16 of the last 21 years, has gained an average of 250 points while, in the remaining five years, dropping by only 95 points, with a max drawdown of 230 points.

Still, we remain cautious and should we get to see a drop back below 10,300 points, the picture darkens, leaves room for a deep correction and drop back below 10,000 points:

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Hourly chart (between March 27, 2020, to April 17, 2020). Accessed: April 17, 2020, at 10:00pm GMT

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between January 3, 2019, to April 17, 2020). Accessed: April 17, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the DAX30 CFD increased by 9.56%, in 2016, it increased by 6.87%, in 2017, it increased by 12.51%, in 2018, it fell by 18.26%, in 2019, it increased by 26.44% meaning that after five years, it was up by 34.2%.

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