DAX Forecast: Index Limps into the Weekend

Christopher Lewis

The DAX Index fluctuated during the trading session on Friday as it headed into the weekend. We are simply grinding sideways along the 50-day EMA, so now that we have broken below the previous uptrend line and then retested it, one would expect to see either a continuation to the downside or the invalidation of the trend line. I suspect the trendline can be erased, as it does not really matter at this point, and I think what we will see going forward is a market that stays in a range.

That is not a huge surprise if you think about it, because we are heading into the month of August, which is without a doubt one of the sleepiest months of the year. As long as that is going to be the case, then I anticipate that a lot of the major indices around the world will be relatively quiet, at least until traders come back from holiday. Furthermore, you have to keep in mind that the world is still arguing about the inflation/deflation situation, so with that being the case, it is difficult to imagine getting clarity in the meantime. Between that and lack of liquidity, I would not expect a huge move in the short term.

Currently, I think that we are going to see the support underneath at the 15,000 level attract a lot of attention, right along with significant resistance at the 15,800 level. Anywhere between there is going to be subject to a lot of volatility and choppiness, but at the end of the day I think if you play this market from a range-bound perspective, you will probably do better than most traders.

If we do break out above the 15,800 level, then it is likely that we would go looking towards the 16,000 level, possibly even towards the 16,500 level. On the other hand, if we break down below the 15,000 level, then it is likely that we would test the 200-day EMA, perhaps even lower towards the 14,000 level. Obviously, this is a “risk on/risk off situation”, and we will have to pay close attention to the overall narrative, as it will almost certainly have a lot to say about what happens in this market as well as many other ones as far as indices are concerned.

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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