DAX 30 Price Outlook:
DAX 30 Forecast: What to Expect in the Week Ahead
The DAX 30 enjoyed a substantial recovery in the first half of the week as risk aversion gave way to renewed optimism – despite roaming covid lockdowns in Europe. As we highlighted last week, recent declines have worked to undermine crucial technical formations and many indices stand on precarious footing as a result. In the case of the DAX 30, prior support has already hinted at its ability to resist a recovery rally.
DAX 30 Price Chart: 4 – Hour Time Frame (June 2020 – September 2020)
To that end, prior support near the 12,935 level roughly coincides with the German index’s high in the week to date. Should risk aversion return and drive the DAX lower before bulls can retake the level, 12,935 might be seen as the topside barrier in the days ahead. In terms of support, the Fibonacci level near 12,450 will precede potential secondary support marked by last week’s swing low at 12,340.
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Interestingly, IG client sentiment data has reversed since last week as traders pile into the short-side. Since we typically take a contrarian view to crowd sentiment, this may suggest the DAX 30 will continue higher, although patience may allow for a more stable assessment of the index. Either way, DAX traders should have their focus on upcoming German unemployment data due Wednesday.
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More broadly, markets are still exposed to considerable uncertainty with the looming US Presidential election. While the event may impact US-centric assets more than those abroad, it is unlikely volatility will be limited to the Dow Jones, Nasdaq 100 and S&P 500. Thus, the DAX 30 will likely feel some effect from any concrete developments in the election race. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX