DAX30 Price Analysis. Possible mild buying but rallies to be limited
Immediate signals are hard to interpret. However, we look for rallies to be limited with resistance located at 11163
Market highlights from the last week
Wednesday 13 May: The German DAX index declined 2.55 per cent on the day and all major bourses recorded losses of over 1.9 per cent on the day amid a more sober risk tone.
Thursday 14 May: Euro-zone equities moved sharply lower ahead of the New York open amid increased reservations over the global outlook following cautious comments from Fed Chair Jerome Powell.
Friday 15 May: Euro-zone equities were able to make limited gains on Friday with a tentative correction after losses over the previous few sessions, although underlying sentiment remained fragile given fears over the underlying outlook, especially with US-China trade tensions.
Monday 18 May: The German DAX index posted a very strong gain of 5.7 per cent on the day to 10-week highs. The French and Spanish bourses also posted gains of close to 5.0 per cent with a 3.3 per cent advance for the Italian FTSE MIB index.
Tuesday 19 May: Euro-zone equities were subjected to a limited correction early in Tuesday’s session, but underlying sentiment held firm as the EU Commission proposed an overall EU recovery fund of over EUR1.0trn.
DAX30 Price Analysis
Let us have a look at the technical viewpoint:
Monthly: From the February high (13829) to the March base (7978) the German index lost 42.46 per cent. It posted a strong recovery, but all the April gains were inside the March negative range. Resistance is located at 11328.
Weekly: The last 5 weeks’ worth of price action has been mixed and volatile with spikes seen in both directions.
Daily: Previous support of 11263 (12 August), now becomes resistance. Level above 11263 found sellers on the week 27th April. Trend of higher highs is seen at 11460.
Intraday 1-hour: We have a 261.8 per cent extension level located at 11169 from 10162-10547. As far as Elliott Wave is concerned, we could see a 5th wave extension.
Outlook: Immediate signals are hard to interpret. However, we look for rallies to be limited with resistance located at 11163-11263.
Possible trade setup:
Action: Selling at 11260
Potential return on risk to first target: R2.89 (reward 414 / risk 143)
Risk warning – your capital is at risk – losses can exceed deposits
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