Is the post-election DAX30 bull run only a technical reaction or is there more?
Source: Economic Events November 09, 2020 - Admiral Markets Forex Calendar
With intensifying signs that Joe Biden has won the US presidential election (we are considering the fact that legal action threats from the Trump Administration may delay the final decision here), equities and, thus, the German DAX30 saw surprising strength into the last weekly close.
In our opinion, the strong bullish push back to above 12,000 points is most likely a combination of:
- Decreasing fears due to uncertainty around who will finally win the presidential race
- Fund managers piling back into the market and heavily buying Equities in anticipation of a massive fiscal package from the new US government to stabilize the tumbling US economy
Technically, the run in the DAX30 perfectly fits our take from last Monday, in which we wrote:
[…] Still, we should not forget 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 […]
That move can clearly be seen now when looking at the DAX30 daily chart. What remains to be seen is if we will get to see a bounce here and, respectively, how strong the bounce will be.
Dropping back below 12,270/300 points would leave the German index vulnerable to another stint down to 12,000 points, probably even lower in the days to come. A first target can be found around the US presidential election lows around 11,770/800 points.
If bulls, on the other hand, remain in control and push the DAX30 above 12,600 points, a continued run up to 12,700 points or possibly even above 13,000 points, will become an option:
Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Hourly chart (from October 19, 2020, to November 06, 2020). Accessed: November 06, 2020, at 10:00 PM GMT
Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (from June 17, 2019, to November 06, 2020). Accessed: November 06, 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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