DAX30 less volatile over the last few days – the calm before the bears?

April 06, 2020 10:00

Source: Economic Events April 6, 2020 - Admiral Markets' Forex Calendar

While the economic calendar is very thin for the start of the week, the picture for the DAX30 CFD nevertheless stays very interesting, and has the potential to see strong moves in either direction.

While we consider the DAX30 CFD to be technically neutral between 9,150/200 and 10,150 points on an hourly time-frame, we still favour a break out of the range on the downside, considering the recent correction into the end of March towards a bear market rally.

In fact, the main driver for the upwards run in Equities (especially US Equities) for the end of the first quarter could be a necessary rebalancing of portfolios by money managers, who need to step up their Equity exposure and selling of bonds in order to maintain their allocation targets.

The resulting "problem" is obvious: after this "rebalancing" demand diminishes, and with the latest bad numbers from the labour market showing that the number of Americans filing for unemployment benefits jumped to 6.6 million in the week of March 28, the failure to recapture the mark of 10,000 points last week clearly points to bears being still in control of the price action and the advantage remaining clearly on the short side.

In the short-term, the main focus stays on the region around 9,150/200 points. If we get to see a sustainable drop below that level, a re-test of the region around 8,000 points, probably a drop even lower stays a serious option in the days to come.

On the other hand: above 9,150/200 points a push back towards and even above 10,000 points respectively 10,150 points stays on the table:

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Hourly chart (between March 17, 2020, to April 3, 2020). Accessed: April 3, 2020, at 10:00 PM GMT

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between December 17, 2018, to April 3, 2020). Accessed: April 3, 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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