DAX 30 Price Outlook:
- The DAX 30[1] is encountering resistance as it attempts to recover from steep declines last week
- Gains for the German index may lag that of the Dow Jones[2] and Nasdaq[3] following a surprise rate cut[4]
- Either way, history suggests[5] stock volatility may continue in the weeks ahead
DAX 30 Price Forecast: Resistance Stands in the Way of Recovery
The DAX 30 has unleashed a recovery attempt after falling precipitously from all-time highs over the last two weeks. As a result, the German equity index has moved to test resistance in the form of a rising trendline from December 2018. While the Dow Jones, S&P 500 and Nasdaq have had the benefit of a 50-basis point rate cut[6] from the Fed, the ECB has fewer options at hand which could see the DAX lag its American counterparts regardless of overhead resistance.
DAX 30 Price Chart: Daily Time Frame (January 2017 – March 2020)
Either way, the rising trendline around 12,260 will be an early test of the DAX’s newfound bullishness. A break above would be an encouraging development that could allow the index to test subsequent resistance around 12,500 ahead of the 200-day simple moving average at 12,740.
DAX 30 Price Chart: 4 – Hour Time Frame (March 2019 – March 2020)
Potential support in the event risk aversion returns should reside around 11,873, 11,688 and, perhaps most importantly, 11,525 which coincides with the recent swing low. A successful break beneath the level would establish a lower-low and may see the DAX 30 continue lower still.
That being said, IG Client Sentiment Data[7] reveals retail traders are once again net-short the DAX –
