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DAX Index Price forecast for the week of October 16, 2017, Technical Analysis

Christopher Lewis
Updated

The German index rallied during the week, after initially pulling back significantly. We ended up forming a hammer, which sits right at the €13,000 level. A break above the top of the €13,000 level should send this market towards the €13,250 level. This market is starting to show resiliency, and as a result I think it’s only a matter of time before the buyers jump in. After all, keep in mind that the DAX is the first place that people throw money at when they’re trying to invest in the European Union. The European Union looks to be strengthening in general, and therefore it makes perfect sense that the DAX would continue to attract money. Even if we did breakdown from here, I suspect that the €12,500 level would offer a significant amount of support, although I am the first person to admit that a breakdown below the hammer is a negative sign.

The latest move has been somewhat impulsive, so it makes sense that we may have a little bit of volatility ahead of us. Quite frankly, at this point I think pullbacks offer value, and therefore I look at this is a “long only” type of market. It’s not until we break down below the €12,000 level that I would become concerned about the overall uptrend, which doesn’t seem very likely to happen anytime soon. I suspect it’s more likely that we go looking for the €13,500 level than breaking down to the €12,000 level. Longer-term, I believe that the DAX will continue to lead the way for many indices around the world, not just the European ones. In fact, there has been a nice correlation between what the DAX does and US stocks to later in the same day.

DAX Video 16.10.17

This article was originally posted on FX Empire

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