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DAX Index Fundamental Analysis – week of October 16, 2017

Colin First
Updated

It is both amazing and extremely frustrating to note that the DAX index spent the entire week trying to make a clear break through the 13000 region and still it ended the week lower than this region. It has turned out to be one of the most tight weekly ranges that we have seen in the index and it now throws open the coming week for both the bulls and the bears to battle out.

DAX In Tight Range

Once the index broke free of the 12500 region and made its way through to the 13000 region a couple of weeks back, many had expected it to breeze through this region in the short term as the trend was quite strong. Though the traders would have expected some consolidation near the all time highs, they would not have been far off the mark to expect the momentum carry the index through the 13000 region.

DAX Daily
DAX Daily

Another reason for this faith would have been the fact that the global stock markets have been buoyant during this period and this is generally expected to influence the DAX as well. The German economy continues to do well despite the slight confusion and uncertainty surrounding the formation of a coalition by Merkel and all these pointed to the index pushing higher. But this was not to happen and we spent the entire week trying to break through the 13000 region and ending the week failing to do so.

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Looking ahead to the coming week, we have the economic sentiment from Germany and we also have the ECB President Draghi making a speech. Both of these are likely to have an impact on the DAX and it remains to be seen which way the index wants to go. If the bulls begin to get tired, they might sell off and we could then see a large correction. On the other hand, a clean break through 13000 will then push the index towards 13200 and 13500 in the short term.

This article was originally posted on FX Empire

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