The DAX index rose by 80 points as investors focused on the slowing coronavirus cases in Germany. The number of active cases in the country has dropped from a high of 72,865 to a low of 53,100. The index was also helped by positive earnings from Vivendi and Philips.
Most companies in the DAX index were in the green, with Muench Rueckvers being the biggest gainer. It was followed by Allianz, Fresenius, and Lufthansa, which gained by more than 2%. There were just six companies in the red, with the worst-performers being Linde, Covestro, Continental, and Vonovia.
The gains today added to those made last week when the government started opening up the economy. In a statement last week, Angela Merkel said that the country would make a gradual reopening with the goal of preventing more damage to the economy. The biggest risk is that the country will start seeing more infections as people get to work.
Another big news is that EU governments are planning to increase spending to help with the recovery. While the figure has not been named, there are expectations that it will be worth trillions of dollars. According to a Spanish newspaper, there are talks that the bill would total more than $1.6 trillion.
Low oil prices also helped support the DAX index. The price of Brent declined by more than 1% while that of crude oil dropped to the lowest level in 20 years. Low oil prices are usually a good thing for German companies because it lowers the cost of production.
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DAX Index Technical Analysis
On the four-hour chart, we see that the DAX index has been on an upward trend since March 19, when it was trading at €7,950. The pair reached a high of €10,775 last week.
We can note a few things on this chart. First, the index has been forming an ascending equidistance channel during its upward trend. Second, the price is above the 50-day exponential moving average. Third, it has formed a double bottom pattern along the 50% Fibonacci retracement level.
Therefore, I expect the bullish trend to continue especially if the price remains above the 50% retracement level.
On the flipside, the alternative scenario is where the price moves lower and retests the 38.2% retracement level.
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