Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
DAX 30 Pressured to the Downside as Volatility Becomes an Issue

DAX 30 Pressured to the Downside as Volatility Becomes an Issue

Daniela Sabin Hathorn,

Key Talking Points:

  • DAX 30 looking for support as bearish pressure mounts
  • Speculative trading causes a spike in volatility followed by a risk-off move
Equities Forecast
Equities Forecast
Recommended by Daniela Sabin Hathorn
Get Your Free Equities Forecast
Get My Guide

The DAX 30 is struggling to recover from yesterday’s selloff as risk-off sentiment took control of the markets. The ongoing coronavirus pandemic continues to be a big concern for investors, but yesterday’s price action was mostly driven by a spike in volatility in US equity markets.

A sudden surge in buying interest in some stocks like GameStop and AMC Entertainment brought on by a coordinated effect on Reddit has led to a few large hedge funds having to liquidate their short positions as the price of these stocks kept on rising, pushing prices higher, at the same time as option sellers found themselves piling into the market to cover their losses.

This meant other positions were having to be liquidated to ensure enough margin to cover running losses which sparked a widespread risk-off move which was exasperated by the large number of orders coming into the market at the US open.

Whilst talking about a bubble is a sticky subject – it always is until it explodes – there is no doubt that equities are treading on a fine line at the moment after a few months of “buy all” mentality. Yes, one or two stocks do not constitute the market, but it’s not like stocks are in need of anymore bullish sentiment. And the events that have unfolded in the last few days show the power of retail investors if they come up with a coordinated effect, ignoring all fundamental and technical reasoning behind a trade, just for the sake of beating hedge funds.

With all of this information to digest, and a lack of actual positive reason to continue heading higher, I expect the markets – European stocks at least – to continue to correct lower in the short-term, as there is still further room for losses before a fair equilibrium is reached and new buyers may be attracted.


DAX 30 4-hour chart

Now that the DAX 30 has broken below key support at 13,600 it has entered a new range between the last two remaining resistance/support lines before price heads towards 13,000. To the topside, buyers are now struggling to creep back above 13,600, which has now turned into short-term resistance, whilst support can be expected at 13,315 if we see price fall below 13,400 during today’s session.

If unable to hold, the next strong support may be seen around 13,220 before heading towards the psychological 13,000 mark.

Germany 40 Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -19% 43% 7%
Weekly -34% 94% 5%
What does it mean for price action?
Get My Guide

Learn more about the stock market basics here or download our free trading guides.

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

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