DAX30 bulls fail to hold 13,000 points – 12,800 about to break?
Source: Economic Events August 17, 2020 - Admiral Markets' Forex Calendar
With the push back above 13,000 points last week on Tuesday, bulls seemed to have everything under control and the path seemed to have been levelled for a deep run back above 13,000 points.
On Friday and into the weekly close it became clear that the push was very likely a fake-out and the important support region around 12,800 points again came into focus.
While the economic docket is thin into the start of the week and earnings season nearly through, recent spikes in Covid-19 cases across the European continent and in Germany have resulted in rising speculation of a second wave and a resulting lockdown.
While we see the chances of such a lockdown as quite low, given the potentially massive negative economic impact, speculation and fear alone might be enough to trigger at least a short-term risk-off tendency, which could result in a sustainable break to below 12,800 and a run to as low as 12,500 points.
In addition, the US Congress and the White House are still struggling to reach a deal on a coronavirus relief package which brings our attention to the question of how much of such a relief package might have been priced into US equities over the course of the past weeks and, thus, into European equities and, here, the DAX30, too.
Fears of a break lower might only diminish with the German index breaking above 13,100 points in the days to come, then switching the bulls' focus to the region around 13,200 points:
Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Hourly chart (between July 27, 2020 and August 14, 2020). Accessed: August 14, 2020 at 10:00 PM GMT
Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (between March 18, 2019 to August 14, 2020). Accessed: August 14, 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 rose 6.87%. In 2017, it increased by 12.51%. In 2018, it fell 18.26%, and in 2019, it increased by 26.44%, meaning that after five years, it was up by 34.2%.
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