Technical traders will have to look at long-term charts to contemplate the next possible upward scenarios the DAX Index could demonstrate. A strong surge upwards early this morning has propelled the German index towards highs it has not tested since late February. The DAX Index also continues to prove it has a tendency to create spikes, but in recent trading, the spikes have proven to have upwards momentum.
Global risk appetite continues to exude optimistic behavioral sentiment in equity indices. While many analysts may look at the recent gains and say there is no justifiable reason for equities to continue to gain as economic and fiscal concerns grip the world, they may be missing a major point. Financial institutions have few other places long term to invest the money they are responsible for managing, meaning stock markets including the DAX Index will continue to be a feeding ground for speculative endeavors by investors who need to produce returns for their clients.
Speculators can be wary, nervous and believe reversals are certain to happen. However, trading is about making sure you catch momentum, and current market conditions continue to exhibit a profound amount of bullish momentum. Reversals lower have certainly occurred, and they have been seen recently in fact, but stepping in front of the trend and wagering against it could prove dangerous.
In order to speculate on bullish momentum, technical traders should look at one-year charts and DAX Index values in February. This is the last big week of full volume trading in many countries as the holiday season begins to catapult into the mindset of financial houses. However, financial houses may believe now is the time to position their holdings if they feel more bullish momentum will occur near term. Traders looking for reversals lower should carefully choose stop loss ratios to protect themselves if they want to trade against prevailing sentiment.
A look at past results in the DAX Index may make speculators nervous about pursuing additional buying positions at these levels, but if German equities continue to feed upon the positive momentum of other global indices, more upside action might be seen. Buying the DAX Index at its current levels may produce unease in speculators, so they may want to wait for slight pullbacks to emerge before participating. However, it is tough to know exactly when market surges will ignite, and if the DAX Index continues to gain, traders may miss out on an opportunity if they are too cautious.
DAX Index Short-Term Outlook:
- Current Resistance: 13585.000
- Current Support: 13470.000
- High Target: 13655.000
- Low Target: 13390.000
