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The Quest For The Bottom: Oil, DAX, Dow Jones

ByAlpari Research & Analysis
AuthorTomasz Wisniewski
Published 03/19/2020, 06:46 AM
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Turmoil in the markets continues. We go from bad to worse, from fear to hope and markets are moving from -8% and circuit breakers to +5% giving sparks of optimism. Seems like traders are slowly adjusting to this and we are in the mode of looking for the most promising trading occasions.

A lot of attention revolves around oil, which managed to break 2016 and 2019 lows hitting its lowest level since 2001. Currently, it’s at around 20 USD/bbl. a level that seems unbelievable to most traders. This creates an urge to buy the dip but the problem is “where’s this dip?” Areas around 17 USD/bbl seem promising as these are lows from 2001. Personally, I don’t believe that the storm is over and I think that we could see levels drop below 20 USD pretty soon.

Now the DAX. The German Index finally reached 8200 points, a level anticipated by us and coming from the highs of the dotcom bubble and the great financial crisis. Technically, it looks like an excellent place for a bullish bounce. Overnight, the price tried to break this level but buyers managed to perform a counterattack driving the index to the green side of the market. In addition, the DAX is now trying to break the mid-term down trendline. So, a breakout of the trendline and the double bottom on such an important support, can be a great buying opportunity.

Now let’s look at the Dow Jones. Sellers managed to break the magical 20k barrier. The price also broke the long-term up trendline. This is negative but we are still above the horizontal support level of around 18500 points coming from 2016 and 2016 highs. As long as we stay above this support level, buyers can still have hope.

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