DAX Market Analysis, October 2021

08.10.2021 | 2 Minimiera

DAX corrected by ca -4.5% in September with quite significant volatility at times. Shorter trend has turned downwards, first time since September 2020 so we finally saw correction we have been waiting for. In September 2020 the leg down did not last for long so it remains to be seen if this one is also fairly small correction and uptrend resumes quickly.

In terms of support levels, 15000 should offer support as it is a psychologically significant round number but also daily MA200 is at the same levels. Also month’s S1 pivot is nearby at 14872. And just to add to that - monthly EMA12 level (ca 14700) has not been tested in an unusually long time so there is potential for that also. So definitely room for DAX to decline more from current levels.


Note: Past performance is not a reliable indicator of future results.

Long term levels of support: 15000, 14800, 14400

Long term levels of resistance:  15500, 16400

Weekly chart below that also shows a clear warning that more downside can be ahead. We have a big red weekly candle with EMA12 crossing below EMA6. In September 2020 this situation was short lived and DAX resumed uptrend towards new all-time high levels - it is very possible that first two weeks of October will show the short term direction for DAX for next 4-6 weeks.


Note: Past performance is not a reliable indicator of future results.

Medium term levels of support: 14800, 14400

Medium term levels of resistance: 15400, 15550

For a long view, 14800-15000 is perhaps the most obvious area for entry - another option to take long when weekly close is above EMA12. So there is no one simple approach in this market situation (if there ever is), but if DAX comes to test 14800-15000 then one possible instrument for a long position is TLNG DAX VT415:

For a short view, possible high probability entries could be from 15400-15500 level where both monthly EMA12 line and monthly pivot level are. DAX can very well come to test these and take another leg down - e.g. TSRT DAX VT377 is a possible option:


Note: Past performance is not a reliable indicator of future results.

Above the average monthly movement for DAX. Fourth quarter is historically strong.


Above: McClellan oscillator has corrected upwards from lows a few weeks ago but now again below zero which is a slightly bearish sign.


Above: Split of shares in DAX index between those above and below their respective (displaced moving average) DMA20 averages. This indicator has shown weakness for quite some time already.


Above: Summary of technical indicators for DAX. It seems to indicate caution and readiness to also short DAX.


Note: Past performance is not a reliable indicator of future results.


Above: Historical weekly and daily changes for DAX. Historically speaking we should see more up.


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