DAX
Dax Index started the trading week on the same note as it ended the previous one – consolidating. However, giving the price action in the last month, the Dax seems to have put a reversal pattern. One may consider it as a head and shoulders, as the chart below shows, or as a rounding top. In both cases, it signals at least a correction should come in the days ahead.
One month already passed, and 2021 is so far no different than the previous year. Hope does exist as vaccination efforts in the developed countries have led to a decrease in the number of infections and hospitalized persons. In the United States, the vaccination rate reached 1.25 million people a day, and the effects should spill over to the economy sooner rather than later.
In Europe, things are a bit different. To start with, there are no vaccines. For example, Spain’s quote this week is 50k vaccines. It means that economic recovery in Europe will lag the one in the United States, and so it is a negative for the stock market.
The head and shoulders pattern has a measured move close to 13,000. Bears may want to stay short with a stop-loss order at 14,000 and a take profit to 13,000 and beyond.
