Source: Economic Events May 18, 2020 – Admiral Markets’ Forex Calendar
The DAX30 ended last week on a little roller coaster. After a sharp drop last Thursday, where the German index attacked the region around 10,200 points. It can hold that level, thanks to massive support and a sharp bounce in US Equities.
But when carefully looking at the short-term hourly picture, and assessing the sequence of falling highs and lows over the course of last week, the mode remains short-term bearish below 10,700 points.
While we have to wait to see whether there will be a volatile start to the week as there is a thin economic calendar, but we’d still be careful with long engagements. In fact, we’d consider Short engagements more attractive from a risk-reward perspective.
That is especially true after last Wednesday’s comments from Fed chairman Powell, where he noted that the recovery of the US economy may take time to gather momentum.
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He could have said that a V-shaped recovery in the US (but also globally) is off the table.
And with expected earnings for the S&P 500 being 28% down from their peak, and 13% below realized earnings (which is way less than during previous recessions and can only be justified by a massive V-shaped recovery in earnings in 2021), US Equities, but also Equities in general including the German DAX, seem to be overvalued, and a next sharper leg lower stays a serious option.
Technically, the DAX30 CFD stays at least neutral as long as we can hold above 10,200 points, but a break lower activates 9,600 points as target on the downside in the days to come:
Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Hourly chart (between April 27, 2019, to May 15, 2020). Accessed: May 15, 2020, at 10:00pm GMT
Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between January 30, 2019, to May 15, 2020). Accessed: May 15, 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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