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.


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