European (and global) stock averages aim still higher (DAX Forecast)

Intermediate
  • This week’s “risk on” theme remains intact with global stock averages building on the strong gains from earlier this week, probing up to recent peaks over the past 24 hours.
  • The negative topping patterns from mid-May have been further rejected, with the April cycle peaks in the crosshairs.
  • This positive theme was driven by hopes of a COVID-19 vaccine (somewhat dented), alongside agreements on a European recovery.
  • Here we focus on the futures contract on the German benchmark average, the DAX.  

DAX day trade outlook: Bullish threat to key 11417.5

A Wednesday rebound rally from 10930.5 support, to build on the Tuesday advance now just above 11230.5 to 11246.5, and to reinforce upside forces from Monday’s very strong rally above the May peak at 11030.5, to keep the risk back higher Thursday.

  • We see an upside bias for 11246.5/250, then the cycle peak at 11337; a break above here aims for the top of the key March bear gap at 11417.5.
  • But below 11045/040 targets 10930.5, maybe even towards 10869.5.

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 7422 and 7000/6948.
  • What changes this? Above 11417.5 sees an intermediate-term range and through 12275.5 an intermediate-term bull trend.

4 Hour DAX Future Chart

4 hour dax future chart 2020-05-21

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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