The DAX Index has likely caused some speculative fatigue among some traders, particularly if they are relentlessly pursuing bullish perceptions. The DAX has a history of providing rather dramatic gaps upon opening for the day and January has helped this reputation. As of this writing the DAX Index is traversing near its lows for the month as global market conditions have become more fragile the past week of trading.
On the 21st of January the DAX Index was traversing near the 14000.00 juncture and over the next few days saw a decline to around the 13610.00 mark. On the 26th of January the DAX Index again challenged highs and traded above the 13900 juncture. This record of ups and downs underscores the rather choppy values the German Index has experienced the past few weeks and as February comes into sight traders have reasons to feel cautious.
However, caution is often a good ingredient in the world of risk taking. A conservative approach to current market conditions in the major indices, including the DAX Index may prove worthwhile if overall perceptions about direction remain correct. In order to contemplate future direction via a technical viewpoint it is advised that three month and six month charts be examined. In late October of 2020 the DAX Index was trading near 11550.00. And days after the US election around the 9th of November, the DAX Index had climbed to 12990.00 which correlated nicely with highs made in mid-October.
The above is mentioned to show that the recent trading of the DAX Index remains well above those values and may indicate what is taking place currently within equities is a short term cyclical downturn which is a healthy component of the markets. It is hard to say if profit taking has been a factor in the recent downturn, but a sign that this is a possibility is the notion the DAX Index and its major counterparts are still within shouting distance of their highs.
Does this mean February will produce a record pace upwards and equities will attain new levels? The short answer is no, but traders may want to maintain a rather bullish outlook for the DAX Index and contemplate the notion that buying equities on downturns which are testing important support levels remains an attractive opportunity. There is a legitimate thought which must be considered regarding risk reward scenarios. Technically a case can still be made the DAX Index has more upside potential than downside potential in the coming weeks. A retest of the 14000.00 could develop on sudden positive impetus upon reignited bullish sentiment which brushes aside resistance.
Yes, short term the DAX Index like its counterparts seems to have fragile sentiment hovering over the trading landscape. The question is how long grey shadows will prevail and what it will take for the bull market to surge forth again. Traders may point to the US political situation, but investors have shown in the past politics can have a one day effect on the markets and quickly be forgotten. Buying the DAX Index on pullbacks remains an attractive perspective for speculators who manage their risk taking wisely.
DAX Index Outlook for February:
Speculative price range for DAX Index 13100.00 to is 14200.00.
Support at 13300.00 should be considered important, and if it is tested and falls through these lows a test of December values near the 13200.00 to 13100.00 junctures could be exhibited.
Resistance near 13600.00 should be monitored, if this level proves vulnerable a quick test of 13700.00 could emerge and then tactical tests of the 13800.00 to 14000.00 may rapidly happen.
