DAX Index: Tests of High Causes Momentary Profit Taking

Robert Petrucci

The DAX Index has begun early trading today with a slight selloff as profit taking has clearly taken place within the German market.

The DAX Index has enjoyed a bullish trend upwards as global risk appetite has increased sufficiently the past week.  The German index has challenged high water marks recently and seen a natural amount of selling strike when higher values have been tested. Selling this morning too has occurred as profit taking clearly shows signs of emerging short term. However, the question is what will happen near term and if risk appetite will continue to dominate equity markets.

As of this morning the DAX Index is trading near the important juncture of 13100.00 and if it can climb to the 13125.00 level it would then again start to test values seen in mid-September. If the German index can prove it has sustained buyers who are willing to emerge as equities traverse higher, the DAX Index may have the capability to rapidly test water marks and break through to new highs.

Across the ocean in the US, early calls on the future markets indicate a negative opening for equities, but this follows a few solid trading days of positive action.  Therefore, a small selloff is to be expected as some financial houses likely are tempted to cash in winning positions. What speculators need to watch is the volume within equity markets and if volatility is being exhibited while the selloff takes place. If equities show negative activity, but do not puncture important nearby support levels, this could mean another dose of buying may be about to unfold.

Selling into a bull market is a dangerous gambit. If a trader wants to take advantage of brief selloffs they have to be able to time the market exceptionally well and that is a very difficult task.  Speculators who are patient and willing to watch the DAX Index retrace with a slight downturn may prove to be the winners if they place limit orders to buy. Support near 10075.00 to the 10050.00 levels does look rather adequate and in fact may not be tested short term.

For impatient traders who have the ability to use solid stop losses buying into the DAX Index can be justified.  Current price levels are within the territory caused by limited profit taking and if this current range holds and is not punctured lower by a sudden development, buying the DAX Index now may give a speculator the change to catch upward momentum which could develop if risk appetite surges again later today globally.

DAX Index Short Term Outlook:

Current Resistance: 13150.000

Current Support: 13075.000

High Target: 13230.000

Low Target: 12998.000

Dax

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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