DAX Market Analysis, February 2021
In January DAX tested monthly R1 pivot level (14069) and psychological level 14000 and when R1 held, index started a correction downwards that many had been expecting.
In January DAX tested monthly R1 pivot level (14069) and psychological level 14000 and when R1 held, index started a correction downwards that many had been expecting. As shown on the monthly chart (second graph below), DAX reversed first to monthly EMA6 level that held but then after a short rebound it failed and DAX continued down to EMA12 level that held. We use EMA6 and EMA12 averages a lot and this was a good example on why they are good levels to keep an eye on.
On yearly chart (below), DAX continues in upwards trend but there is a resistance forming at 13500-13700 with possible triple top. If this happens we could potentially see a bigger correction downwards at least to yearly EMA6/12 levels, at 12700-13000.
Long term support levels: 12000, 12650
Long term resistance levels:: 13750, 14000
Aforementioned weekly chart below with monthly pivot levels visible. EMA12 line (ca 13500) is a significant level to follow - DAX can easily come to retest the level and if it fails it is quite possible that we will see more significant movement downwards. February is historically speaking a slightly negative month for DAX so also from that perspective there is likelihood for correction downwards. Also the Reddit infused, coordinated purchases of few shares (GameStop and Nokia) generated unusual volatility in US which also added to level of nervousness on the markets.
Mid-term resistance levels: 14000
Mid-term support levels: 13500, 13700
For long positions, EMA12 line holding (13500) is important, if DAX falls below then more likely direction is more down. One possible product for long trade is:
Bull & Bear Certificates
For a short view there are more entry points - for longer term Short swing, DAX should not cross level 14000 above. A potentially good option is
Bull & Bear Certificates
Investors’ sentiment in US is currently neutral, bearish view has increased significantly in January. Reddit WallStreetBets group created major movements on few stocks which most likely added to the bearish sentiment.
Above: Historically February has been slightly negative month for DAX.
Above: McClellan oscillator is heading down - market strength has clearly weakened.
Above: Technical indicators summary for shares in DAX index: a clear split between strong buy and strong sell makes indication fairly worthless.
Above: Average weekly and daily changes for DAX
Above: World’s most significant futures are also in a mixed state.
Risks
This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.
The products are not capital protected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.