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DAX 30 Outlook - Running Into Resistance, Sentiment Remains Bullish

DAX 30 Outlook - Running Into Resistance, Sentiment Remains Bullish

2020-11-11 10:30:00
Nick Cawley, Strategist
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DAX 30 Price, Chart and Analysis:

  • Dax hitting resistance after Covid-19 vaccine news boost
  • The chart looks overbought but client sentiment remains positive.
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The German 30 has rallied nearly 2,000 points since printing a multi-month low of 11,331 on October 30, an advance in excess of 16% in less than two weeks. The DAX 30 is now hitting a block of prior resistance that may prove difficult to overcome in the short-term, despite the positive Covid-19 vaccine news. Indeed, this very news while global equity positive, may not boost the tech-heavy DAX as much as other indices, the FTSE 100 for example, as investors rotate out of tech stocks and back into more value stocks and sectors as the lockdown trade unwinds.

The daily chart does show a positive set-up overall which suggests that further gains are in store on a medium- to longer-term outlook. The DAX trades above all three simple moving averages, with the 200-dma now turning higher, while a series of higher lows can be seen this month. IG client sentiment is also bullish.

Moving Averages (MA) Explained for Traders

In the short-term, the cluster of prior highs between 13,200 and 13,500 may prove difficult to overcome and profit-taking may set-in after such a sharp rise since the end of October. This rally has seen the CCI indicator move into overbought territory for the first time in a month, another warning sign. Any sell-off should be fairly mild and contained between 12,600 and 12,674 (50-dma).

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DAX 30 Daily Price Chart (January – November 11, 2020)

DAX 30 Outlook - Running Into Resistance, Sentiment Remains Bullish
Germany 30 BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% 2% 1%
Weekly -3% 25% 14%
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IG client sentiment data show32.89% of traders are net-long with the ratio of traders short to long at 2.04 to 1. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany 30-bullish contrarian trading bias.

DAX 30 Outlook - Running Into Resistance, Sentiment Remains Bullish

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What is your view on the DAX – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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