DAX below 12,000 points into the US presidential election – what’s next?

November 02, 2020 11:30

Source: Economic Events November 02, 2020 - Admiral Markets' Forex Calendar

The DAX saw a big drop last week losing more than 8%, falling below 12,000 points.

As pointed out in our last technical analysis for the German index, failing to sustainably recapture 12,700/730 points, leaves the DAX30 at risk of another bearish stint and a testing of the region around 12,200 points which was already seen last week on Monday.

The acceleration on the downside was then triggered by the imposed lockdowns in Germany and France on Tuesday and Wednesday.

Here are some factors one could have helped:

  • A very dovish ECB on Thursday with president Lagarde saying that there's "little doubt" that the ECB will have to recalibrate monetary policy in December
  • The ECB will likely increase PEPP from 1.35 trillion Euro to 2 trillion Euro and probably push the facility rate into even deeper negative territory
  • Crushing earnings from Amazon, Google, Apple and Facebook

However, the picture still is not bright.

While, technically, the first signs of a bearish divergence on the H1 in the RSI(14) point to diminishing bearish momentum, below 11,650/700 points the sequence of falling highs and lows remains intact and the German index faces the risk of a drop to below 11,000 points.

Still, we should not forget that the US presidential election Tuesday/Wednesday will probably "re-shuffle the deck" and if, for whatever reason, the DAX30 recaptures 11,650/700 points, a deep run back above 12,000 points could be the result, technically resulting in a re-test of the neckline of the Head-shoulder formation on a daily time-frame:

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Hourly chart (from October 12, 2020, to October 30, 2020). Accessed: October 30, 2020, at 10:00 PM GMT

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (from June 10, 2019, to October 30, 2020). Accessed: October 30, 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.

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