Bottom line:  DAX remains bearish against 13800 resistance over the long term. The counter trend rally has been unfolding since 8257, and is expected to find resistance around 10200 levels before reversing lower again.

Fundamental Outlook:

The European Central Bank has come out with a package of around EUR750bn, after the March 2020 meeting. This Pandemic Emergency Program shall be used across major asset classes until the end of 2020. The above package will help as the ECB remains committed towards the EURO.

The weeks focus continues to remain in the COVID-19 pandemic and the record Jobless claims over the last 2 weeks in the U.S. The total number of infected cased increased further in the U.S, as it tops the list at 367,629, with over 625 new cases added.

The Euro zone also awaits a decision to be taken over the Corona Bond this week. Oil prices will be looking for cues from the OPEC meeting to be held on April 09, 2020.

Technical Analysis:

DAX might have terminated its counter trend rally around the 10100 mark or could push through 10200 levels before reversing lower. Immediate price resistance is seen towards 12200 levels and any pullback rallies should remain capped below that.

DAX pullback is close to hitting the fibonacci 0.50% retracement at 10278 levels and a bearish reversal could be expected there. A push higher could open doors for testing 10700/800 levels before reversing lower again.

Most traders might be willing to initiate fresh short positions between 10200 and 10700 levels, with a protective stop above 12200 and projected targets below 8200 levels respectively. If prices reverse from 10200 levels towards fresh lows, DAX would complete 5 waves lower from 13800 levels. A meaningful corrective rally can be expected after that.

Overall, DAX remains bearish against 13800 levels going forward. The counter trend rallies might be used as opportunities to initiate fresh short positions targeting below 8200. 

Prepared by

Harsh Japee, Technical Analyst.

DAX Chart

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