DAX Forecast: DAX Still Finding Buyers on Dips

Christopher Lewis

I think we are looking at the market as one that will continue to find plenty of buyers on dips.

The DAX Index fell to kick off the trading session on Monday as we reached towards the previous uptrend line that we have now broken back over. At this point, you should also pay close attention to the 50-day EMA which also looks as if it is offering support, so I think it is likely that we will see buyers sooner rather than later. There is also a bit of a gap just underneath, and I think there is plenty of technical analysis here that suggests that we will eventually go higher.

Looking at the highs above, we have seen the 15,800 level offer resistance more than once, so it does make sense that we would see an attempt to get back there and a bit of selling pressure once we get there again. With that being the case, I think it is only a matter of time before we have more of a fight on our hands. However, if we were to break the 15,800 level, then the market is likely to go looking towards the 16,000 level. Breaking above there then opens up the possibility of a continuation of the overall longer-term trade.

Breaking down below the 50-day EMA then opens up the possibility of a move down towards the 15,000 level where I would see plenty of support coming into the market as it is a large, round, psychologically significant figure. I do not see that happening, but it is a possibility if we get some type of major “risk off” type of situation. Bond yields in Germany are negative, so it is forcing money into the stock markets in general.

As a general rule, if people are a bit cautious about the economy in Europe, and if they are going to buy stocks, it will be in Germany as the DAX is considered to be the “blue-chip index” of the continent and Germany is the largest economy. It is also a play on major exporters, so it is possible that that will come into play as well. I think we are looking at the market as one that will continue to find plenty of buyers on dips.

DAX Index

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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