The DAX index rose by more than 3 per cent as the overall sentiment in the market improved. This sentiment started in the United States, where researchers at the University of Chicago found some success in treating coronavirus. They used a drug manufactured by Gilead Sciences, an American firm.
Investors also reacted to news that Germany was easing restrictions that were put in place a few weeks ago. This announcement was announced by Angela Merkel, who had received a go-ahead by the National Academy of Sciences. Although the reopening will be gradual, investors are optimistic that the country will recover in due time.
Meanwhile, in the United States, Donald Trump announced guidelines for reopening the economy. In a statement to the press, the president said that the country would reopen in three phases. In the first phase, people will be allowed to return to work and minimize non-essential travel. In the second phase, the US will allow gatherings of 50 people and non-essential travel while the third phase will allow many establishments like bars to open. His guidelines was welcomed by the business community and policymakers. In a statement, Neel Kashkari said that this plan made sense in the long term.
The stock price of all companies in the DAX index rose. The biggest gainer was MTU Aero, BMW, Deutsche Bank, and Continental, which rose by more than 4%. The worst performers were Vonovia, Fresenius, Deutsche Bank, and Wirecard, which rose by more than 1%.
Other global indices rose too. In the United States, Dow Jones and S&P 500 futures rose by more than 4% while in Europe, the FTSE 100, CAC 40, and Stoxx 40 rose by more than 2%.
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DAX Index Technical Analysis
On the four-hour chart, we see that the DAX index is in an overall bullish trend. The index has also formed an equidistance channel during this upward trend. Yesterday, the index found some resistance at the lower line of the channel, which was also the 23.6% Fibonacci Retracement level.
This retracement was drawn by connecting the highest and lowest levels in March.
Therefore, I expect the bullish trend to continue as the index tries to retest the upper side of the channel at €11,000, which is also along the 50% Fibonacci Retracement level. The bullish trend will remain if it manages to break past this 50% level.
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