DAX Index: What is the Elliot Wave Saying?

The DAX index is up by more than 1.42% today, becoming one of the best-performing indices in Europe. The only better-performers are FTSE MIB and IBEX 35 that are up by more than 1.50% and 1.60%, respectively. On the other hand, the FTSE 100, CAC 40, and Stoxx 50 are up by 0.60%, 1%, and 1.15%, respectively.

DAX cheer the recovery fund deal

As I wrote earlier, European Union leaders agreed to a €750 billion13 eurozone funding deal after four days of intense negotiations. The deal will see the European Commission go to the bond market, raise these funds, and distribute them to member states. Germany will be among the biggest beneficiaries of this funding, which means that DAX index constituents will be among those to benefit.

For example, according to Bloomberg, most of these funds will go towards green economies. This means that companies like Siemens will be among those to benefit. This is because the company is among the biggest players in green products. Also, automakers like BMW, Daimler, and Volkswagen, will benefit as these funds trickle down to individuals.

Meanwhile, the DAX index is rising because of the coronavirus vaccine news that came out yesterday. According to The Lancet, the vaccine being developed by AstraZeneca and scientists at Oxford University had shown positive signs. A vaccine would be a beneficial thing for the DAX index because it would lead to more business around the world.

DAX Index top movers

Fresenius, the healthcare company, is the best-performing stock in the DAX index today. It is up by more than 3.52%. It is followed by Adidas, Infineon, Continental, Volkswagen, and BMW. These shares are up by more than 2%. A notable gainer is SAP, which rose mostly because of the strong demand for cloud computing as evidenced by the excellent results by IBM.

Meanwhile, the weakest performers are Deutsche Telekom, Linde, Vonovia, and Deutsche Boerse, which are up by less than 50 basis points.

DAX technical outlook

The DAX index is trading at €13,237, which is the highest level since February 24. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. As I wrote yesterday, the index is in the fifth wave of Elliot Wave, which is a bullish sign.

It is also above the ascending trend line shown in green. Further, it is above the 23.6% Fibonacci retracement level. This retracement connects the highest and lowest levels this year. Therefore, I expect the index will continue rising as bulls target the next resistance level at €13,500.

On the other hand, a move below €13,000 will invalidate this trend. This price is an important psychological level and is also the highest point on June 8.

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DAX index forecast

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