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Technical overview: DAX30

Summary:

  • German stock market suggests a possibly deeper sell-off worldwide
  • DAX30 (DE30 on xStation5) draws an irregular correction with a potential target at 12240 points
  • There are several important technical levels which deserve more attention

The global sell-off seen across equity markets gathered momentum following the severe plunge seen on Wall Street on Monday. Having said that, one may assume that a majority of investors could treat the current downtrend just like a pullback rather than a longer-term reversal. In turn, as far as the DE30 is concerned it’s worth recalling that it broke a crucial support on last Thursday falling by 1.3%.

link do file download linkIs the global equity sell-off just a pullback? Source: xStation5

On the other hand, having such the incredible beginning to the year across equity markets around the world most of investors could have counted on a corrective move, which however, in case of the German DE30 erased all gains made in the past month. What’s more, it seems that there is still quite abundant space to unfold deeper drops. Finally let’s add that the global bond rout is among the reasons standing behind stocks’ underperformance, but apart from it, there were somewhat worse than expected earnings of companies listed on Wall Street. Let’s take a closer look at the charts below.

Weekly (W1)

Beginning with a broader backdrop the price is fulfilling an irregular correction scenario we mentioned last week. The ongoing move could reach as low as 12240 points where some demand may emerge. In turn, if bearish momentum is enough strong, it could take the price even toward 12000 points being underpinned by a 38.2% retracement.

link do file download linkThe DE30 is realizing an irregular correction with the fourth wave. Source: xStation5

4-hour (H4)

At a H4 interval the price broke through a local demand zone in the vicinity of 12850 points which serves as the closest resistance right now. It’s worth noticing that the possible price target at 12240 points coincides with a 78.6% retracement as well which strengthens its importance. Earlier, a 61.8% retracement could also constitute some obstacles for bears.

link do file download linkThe key support has become the major resistance. Source: xStation5

Hourly (H1)

Finally, looking at an hourly time frame one may set possible resistances. The first one can reach as much as 165 points, but do notice that the bear market was resumed today after a 135 points pullback.

link do file download linkThe overbalance strategy seen at an intraday time frame. Source: xStation5

Disclaimer

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