Dax index jumps higher on Monday morning as more businesses reopen and the coronavirus death toll continues to decline in Europe. One of the most severe hit countries by the coronavirus reported positive data during the weekend as the new infections and the death rate drops. Investors hope that the economies will move from the bottom and the upcoming data for May will improve after the April’s bottom.
Feds chair Jerome Powell said that the U.S. economy might shrink by more than 30% in the second quarter; he also warned that a full recovery might take until the end of 2021 and it is not time to bet against the U.S. economy in the medium term.
Meanwhile, many countries around Europe have decided to end the short-selling ban that started in mid-March as the stock markets trading volumes and volatility return to pre-coronavirus levels.
The Dax index correction from monthly highs tested the 50-day moving average the previous week and managed to bounce. Stocks also boosted as the crude oil price continues the rebound from historic low levels and now have reached the monthly highs.
Dax index started with a gap up on Monday morning and as of writing is 2.30% higher at 10,708. The Dax index is 19% lower in 2020, while is trading 30% higher since the March lows. The technical picture has improved for the short term as the index successfully tested the 50-day moving average last week. The long term picture remains bearish as the index continues to trade below the 100-day moving average.
On the upside, first resistance for the Dax stands at 10,726 the daily top. A move above 10,716 would target yesterday’s high at 10,883 the high from May 12. A break higher might challenge 11,230 the high from April 30.
On the flip side, initial support for the Dax index stands at 10,677 the daily low. In case the index breaks below, then the next support is at 10,380 the low from Friday’s session. Below 10,380 the next support will be met at 10,188 the 50-day moving average.