DAX30 bears in charge of the price action again, 12,000 in focus

By Admiral Markets

Source: Economic Events June 15, 2020 – Admiral Markets’ Forex Calendar

Up to the Fed rate decision on Wednesday, the DAX had been losing some of the bullish momentum it has had since it took off in Mid-May, where it gained more than 25% from its lows in less than a month, until it found resistance around 12,900 points.

On Thursday, the tide turned and the German index dropped more than 5%, back below 12,000 points, and struggled to close the week of trading above this psychological relevant threshold.

What became clear in our opinion is, that despite Wednesday’s ‘Equity-friendly’ rhetoric from the Fed (which can be interpreted as ‘ultra-dovish’ as it keeps interest rates at 0% at least till the end of 2022, continuing to buy USTs and MBS at least at the current pace of ~80b USD/month), market participants expect more, with much of the Fed dovishness was already priced into the market.

That said, even with the German index making back some of its losses from Thursday on Friday, the risk of another sharper drop in the days to come seems quite high with the risk-reward-ratio becoming more attractive on the Short-side.

A stronger zone of resistance can be found around 12,300/350 points, the former trend-support.

A drop below 11,800 respectively the pre-weekly lows around 11,700 points can realistically trigger a next wave lower and activates the region around 11,450/500 as a potential target on the downside:

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Hourly chart (between May 26, 2020, to June 12, 2020). Accessed: June 12, 2020, at 10:00pm GMT

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between February 27, 2019, to June 12, 2020). Accessed: June 12, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the DAX30 CFD increased by 9.56%, in 2016, it increased by 6.87%, in 2017, it increased by 12.51%, in 2018, it fell by 18.26%, in 2019, it increased by 26.44% meaning that after five years, it was up by 34.2%.

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