Septembers mini storm hits Europe - DAX

In yesterday’s note on the AUDUSD, Septembers volatility episode was referred to as a mini storm whose reach had largely been confined to U.S. stocks, albeit with a stronger impact on the high growth tech sector.

Charts (3)

Shortly after the article was published and as storms are capable of doing, it changed focus hitting a broader range of asset classes including European equity markets.

The cause of the change in direction, an acceleration in new coronavirus cases in Europe that is fanning fears that a new round of government lockdowns and restrictions will be required.

While rolling lockdowns have become the new normal here in Australian and New Zealand, the likelihood of a dreary end to the Northern Hemisphere summer sadly appears to be increasing.

It also coincided with reports that Deutsche Bank, along with other global banks has continued to profit from illegal business dealings with criminal networks, despite previously being fined by U.S. regulators.  

In response, the German stock market, the DAX after spending most of the Northern Hemisphere summer drifting sideways, dropped -4.37%, one of the largest one day falls since March.

While it’s impossible to rule out the fall being a one day wonder, similar to the one in late July, the manner of yesterday’s fall after a period of very low volatility combined with evidence of a completed 5-wave advance from the March low to the September 13461 high, suggests yesterday’s pullback has further to go.  

At the very least, I would expect to see the DAX retest the band of support 12200/100 area coming from the July 31st, 12199.5 low and the 200-day moving average, not far below that at 12180.

Providing this support region holds, the expectation is for the uptrend to resume, leading to a retest of the year to date and all-time highs at 13824.

Keeping in mind, should the DAX fail to hold the 12200/100 support area, the odds of a deeper pullback towards 11500 increase considerably.  

Septembers mini storm hits Europe - DAX

Source Tradingview. The figures stated areas of the 22nd of September 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.