DAX stuck within tight trading range
DAX Performance-Index (DAX) Technical Analysis Report for Aug 07, 2020 | by Techniquant Editorial Team
DAX ended the week 2.94% higher at 12674.88 after gaining €83.20 (0.66%) today. Trading up to €117.35 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on July 29th, DAX actually lost -3.45% on the following trading day. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (DAX as at Aug 07, 2020):
Friday's trading range has been €174.22 (1.38%), that's slightly below the last trading month's daily average range of €189.49. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DAX. Prices continued to consolidate within a tight trading range between 12517.44 and 12799.21 where it has been caught now for the last three trading days.
One bullish candlestick pattern matches today's price action, the Hammer.
After trading as low as 12517.44 during the day, the index found support at the 50-day moving average at 12527.80. Prices are trading close to the key technical resistance level at 12799.21 (R1). After having been unable to move lower than 12519.85 in the prior session, the stock index found buyers again around the same price level today at 12517.44.
While DAX is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the nearby swing high at 12799.21 where further buy stops could get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 50" stand out. Its common bullish interpretation has been confirmed for DAX. Out of 39 times, DAX closed higher 69.23% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after nine trading days, showing a win rate of 64.10% with an average market move of 0.13%.
With five out of the other five Major European Indices closing higher today, the ones that stand out on the positive side are TECDAX gaining 1.97% and BEL20 closing 0.95% higher. None of the markets ended the day in the red. Read more