Is a bigger top going in for stocks? – DAX forecast

Intermediate
  • A meaningful selloff for global share averages over the past 24 hours as global stock averages have reacted to the rise in significant coronavirus cases in some US states, alongside a new outbreak in Australia alongside ongoing outbreaks in Japan, China and Germany.
  • This has weighed on risk assets, already damaged by the mid-June selloffs after the subdued outlook for the US economy from the Fed.
  • Here we look at the German benchmark stock average future, the DAX forecast for today, late June and into July.

DAX day trade outlook: Topping pattern and downside risks

A plunge Wednesday through 12130 and 12050 supports to 12002.5, to reject the Tuesday advance above 12491.5 resistance as a fakeout, but capped by the 12610 barrier, at 12575.5.

This resumes negative forces from the early Monday push down to close the support gap from mid-June at 12134-10, plus from the aggressive mid-June plunge (through a key support at 12325.5 and to close the bull gap at 12100-082), to aim to the downside Thursday.

·      We see a downside bias for 12002.5 and 11902; a break here aims for 11759.5 and key 11589.5, and maybe 11510.5.

·      But above 12207/228 aims for 12319/335; above here opens risk up to 12465/70 and possibly the 12591/610 area.

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 and the acceleration above the 12275.5 swing peak from early March, sets an intermediate-term bull trend.

  • Upside risks: We see an intermediate-term bull trend and risk for 13824 and 15000.
  • What changes this? Below 11589.5 shifts the intermediate-term bull trend straight to an intermediate-term bear trend.

6 Hour DAX 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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