The German Dax index is at crossroads. On the one hand, the market formed a head and shoulders pattern – yet to break the neckline. Hence, a bearish pattern that signals weakness. On the other hand, the consolidation on the right shoulder ended up with a triangle as a reversal pattern – a bullish pattern that now threatens to break to new highs.
Dax follows closely the price action seen in the United States at its peers. The S&P500, Nadsdaq100, and the Dow Jones, are all bid ahead of the Fed decision today.
Europe seems to have gotten its act together in the second quarter of the year so far. With only a few days ahead of the end of the month, the European vaccination effort has reached impressive levels. At least 25% of the adult population in most of the European countries have received at least one dose of the COVID-19 vaccine, and so the economic recovery should be faster than expected.
Speaking of that, Germany already laid down a plan of how that recovery will look like, making public a document with over one thousand pages that highlights the efforts and the focus in the months ahead.
Dax Index Technical Analysis
Bulls may want to stay on the long side with a stop at the head and shoulder’s neckline and target a new all-time high. Bears may want to wait for the price to break below the neckline before going short with a stop at the previous lower high and a target that exceeds 1:2 risk-reward.
Dow Jones ended 2.32% higher at 25,595 after the index tested and bounced from the 50-day moving average. The index rejected several times the last two weeks at the 200-day moving average. The short term picture has improved after yesterday’s gains, but the long term outlook remains bearish below the 200-day moving average.
Dax Index Price Forecast
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