DAX nears vital support area

The German index is down 40% from its all-time highs reached just three weeks ago, and it continues to decline as the coronavirus situation is getting worse instead of better.

The critical support seems to be in the 8,100 – 8,200 EUR zone, where pre-dotcom and pre-financial crisis are located. If this level is taken out, another down leg could occur, targeting 7,600 EUR.

We need to say that the current pace of the decline is unprecedented and stocks are falling sharply despite significant stimulus by central banks. And it still looks far from over.

 

However, a short-term correction could occur, which could push the DAX back toward the psychological level of 10,000 EUR. As long as the index remains below this level, the outlook seems bearish, and further losses cannot be ruled out. Volatility continues to be extreme, and this might persist throughout the next weeks.

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