Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chart Of The Day: DAX Looks Set For New Highs

By Fawad RazaqzadaStock MarketsMay 28, 2021 09:36
ca.investing.com/analysis/chart-of-the-day-dax-looks-set-for-new-highs-200470047
Chart Of The Day: DAX Looks Set For New Highs
By Fawad Razaqzada   |  May 28, 2021 09:36
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This article was written exclusively for Investing.com

As we near the end of another month, investors’ insatiable appetite towards risk remains intact, with several major global stock indices trading at or near record highs. Sentiment remains supportive towards equities and other assets that stand to benefit from a rebound in economic growth, which is well and truly underway in many regions, as lockdown measures continue to ease and travel slowly resumes thanks to ongoing Covid-19 vaccinations programmes.

On top of this, huge monetary support continues to flood the financial markets. Most policy makers at major central banks have persistently dismissed inflation concerns, with the likes of the Federal Reserve and European Central Bank keeping their asset purchases programmes running at full throttle.

Knowing that central banks have their backs, investors have therefore had little reason to turn bearish towards stocks, with momentum-chasing traders happy to buy every short term dip back to support. 

In Europe, investors have also been piling into equities as the ECB remains one of the most dovish central banks out there. Unsurprising, the German DAX has been one of the strongest European indices as it has repeatedly climbed to new all-time highs recently. And judging by Thursday’s price action, it is potentially on the verge of hitting another fresh high soon. 

DAX Daily
DAX Daily

As per the daily chart, the DAX has been pulling back for a few days as it consolidated its recent gains. But on Thursday, the German index created a key bullish signal as it formed a hammer-like candle on the daily time frame. The buyers stepped in to defend a pivotal level around 15,350, which had acted as both support and resistance in recent weeks. 

The hammer candle often precedes gains in a rising trend as it clearly indicates a reversal from previous selling to buying pressure. The fact that this hammer was formed around the still-rising 21-day exponential moving average makes it even more compelling. This particular moving average is often used as a key technical tool by trend followers, as it reflects the short term directional bias in an objective way. 

On this occasion, we have also seen a breakout from the hourly bull flag pattern. This is another bullish signal as it indicates that after a period of consolidation, the market is now ready to make further gains as the selling pressure remains low. 

DAX Hourly
DAX Hourly

From here, the next bullish objectives are: (1) 15,540, the high from last week, followed by (2) 16,600, the all-time high. Subsequent bullish objectives could be the Fibonacci extension levels shown on the chart. 

There is little point in discussing bearish targets yet as selling in a rising market is not a good idea until the tide turns. We will cross that bridge when we get there, but for now the DAX clearly remains in an uptrend and thus for traders buying the dips—even at these levels—make more sense than looking for shorting opportunities at resistance.

Chart Of The Day: DAX Looks Set For New Highs
 

Related Articles

Chart Of The Day: DAX Looks Set For New Highs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Deepak Chugh
Deepak Chugh May 28, 2021 12:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
How do we take exposure to DAX from US markets
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email