Capitulation type activity as stocks plunge – but watch for a bounce…(DAX forecast)

Intermediate
  • Another aggressive selloff over the past 24 hours in global stock averages, with safe havens, bonds and the Japanese yen rallying again.
  • This was again a product of growing worries regarding the global spread outside of China, of the coronavirus.
  • Global stock averages have capitulated through key levels from Q1 2020 and even Q4 2019.
  • Here we focus on the future on German benchmark average, the DAX0.

DAX Future day trade outlook: Intermediate-term bearish shift reinforced, but wary of a corrective bounce

A Tuesday plunge through key supports at 12880.5, 12786.5 and 12640.5 to reinforce Monday’s bear gap plunge (gap 13421-492.5) through key 13219 support (for an intermediate-term shift to bearish), and whilst below 12813 we see a further downside threat Wednesday, but given momentum is at an oversold position, we are wary of a corrective recovery on a move above 12813.

  • We see a downside bias for 12713.5 and 12606/12592.5; a break below aims for 12592.5, then 12512 and 12440, maybe even 12375.5.
  • But above 12813 targets 12869.5; above opens risk up towards 13009.5, possibly even 13158.5.

DAX intermediate-term outlook

The late February plunge below 13219 signalled an intermediate-term shift to a bear trend.

Downside risks: We see an intermediate-term bear trend and risk for 12375.5, 12000 and 118075.

What changes this? Above the bear gap at 13421-492.5 see an intermediate-term range and through 13824 an intermediate-term bull trend. 

 4 Hour DAX Future Chart

DAX Chart 2020-02-26

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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