DAX30 with bullish consolidation before a final attack on All Time High?

November 23, 2020 11:30

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

The past week of trading was astoundingly calm with the German DAX30 index stabilizing in a tight trading range between (roughly) 13,000 and 13,300 points.

"Astoundingly", because the week of trading started similarly to the week before. The week before, Moderna, an American biotechnology company, announced that its phase 3 study met statistical criteria with a vaccine efficacy of 94.5% (P < 0.0001). What's probably even more interesting, compared to the Pfizer/Biontech news, is that Moderna announced a longer shelf life for Its COVID-19 vaccine candidate at refrigerated temperatures.

Surprisingly, the DAX30, and Equities in general, didn't take off like it did the week before, but instead a short bullish stint found stronger resistance around 13,300 points and drifted back towards the 13,000 point-mark in the days after.

One way to interpret that move is that market participants are realizing that a vaccine alone won't cut it and that we are still far away from returning to "normal", especially from an economic standpoint.

Nevertheless, we still expect, rather sooner than later, a massive fiscal package from the US government, as well as from European countries after the recent lockdowns, to stabilize the global economy and an ultra-dovish approach from central banks around the globe, especially from the FED to finance that "fresh" debt.

That's the main reason why we don't want to be short the DAX30 in the current environment and consider the recent choppy and low-volatility price action more to be a "take a deep breath", expecting a bullish breakout with a break above 13,300 points making a run up to the current All Time high around 13,800 points very likely, stop-over around the September highs around 13,450 points.

While we consider the following unlikely, a failed attempt to break above 13,300 points and drop back below the psychologically important 13,000 point-mark would confirm a short-term top in the German DAX30 once the index drops and closes below 12,900 points. In such a scenario, a deeper corrective move with a first target around 12,500 points becomes an option:

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Hourly chart (from October 30, 2020, to November 20, 2020). Accessed: November 13, 2020, at 10:00 PM GMT.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (between July 01, 2019, to November 20, 2020). Accessed: November 13, 2020, at 10:00 PM 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%, and in 2019, it increased by 26.44%, meaning that in five years, it was up by 34.2%.

Check out Admiral Markets' most competitive conditions on the DAX30 CFD and start trading on the DAX30 CFD with a low 0.8 point spread offering during the main Xetra trading hours.

Discover the world's #1 multi-asset platform

Admiral Markets offers professional traders the ability to trade with MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level than with MetaTrader 4. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures that refer to any past performance is not a reliable indicator of future results.
  6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
  7. Any kind of previous or modelled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.

Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.

Admirals An all-in-one solution for spending, investing, and managing your money

More than a broker, Admirals is a financial hub, offering a wide range of financial products and services. We make it possible to approach personal finance through an all-in-one solution for investing, spending, and managing money.