European (and global) stock averages surge – DAX Forecast

Intermediate
  • Last week’s “risk on” theme has been reinforced already this week, despite the UK and US markets being closed Monday, with Asian and European stock averages surging to new cycle highs in many instances, reinforcing the positive theme we highlighted in last week’s report.
  • This positive outlook continues to be driven by hopes of a COVID-19 vaccine alongside the further unlocking of the global economy from lockdown.
  • Here we focus on the futures contract on the German benchmark average, the DAX.  

DAX day trade outlook: New cycle high to close the key March bear gap at 11417.5

A surge Monday with US and UK markets closed to overcome the late April cycle peak at 11337 and a push still higher overnight into Tuesday to close the key March bear gap, at 11417.5, shifting the intermediate-term outlook from bearish to neutral, to keep the risk back higher Tuesday.

  • We see an upside bias for 11530, then 11635/640; a break above here aims for 11768 and maybe even 11862.
  • But below 11400 targets 11351/325, maybe even towards 11236 and 11111.

DAX intermediate-term outlook

The late May rally above 11417.5 signalled an intermediate-term shift from a bear trend to a broad, neutral range seen as 12275.5 to 10159.

  • Upside risks: Above 12275.5 sets an intermediate-term bull trend and risk for 13824 and 15000.
  • Downside risks: Below 10159 sets an intermediate-term bear trend and risk for 9300 and 7969.5.

4 Hour DAX Future Chart

dax chart

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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