DAX Fundamental Analysis – week of September 26, 2016 – Forecast

The charm of the weekly chart lies in the fact that it can give you an entirely different perspective from what you had in your mind last Friday. The traders and the investors are so consumed by all the chaos surrounding the markets during weekdays that they fail to look at the bigger picture surrounding an instrument and they lose out on good trading opportunities.

Now lets have a look at the weekly chart of the German DAX. It has a highly bullish week helped by the fact that the US Fed did not raise the rates in their meeting as was expected by a section of the market. This buoyed the stock markets around the world and the DAX was no exception and it enjoyed a large bullish run. It took out various small resistances on its way up and on Thursday, it hit a wall against a large previous resistance at 10670. It could not break through the wall on Thursday and Friday and sits just below this range high. Look at the previous weeks, the importance of this level becomes clear and unless this level is broken through cleanly, we could have the DAX fall by 300-400 points in the coming week or two.

The German Ifo Business Climate will be released on Monday and that could drive the DAX in either direction. We believe that the level of 10670 would be a tough nut to crack especially with no major market moving news scheduled for the coming week. With this in mind, we could see a correction of 300-400 points in the DAX in the coming week or two. On the other hand, if the level of 10670 breaks cleanly, we could be looking at a strong bullish run towards 10800 and beyond. So, if the DAX opens bullish on Monday, it may be a good idea to short the DAX with a SL beyond the range top.

The weekly forecasts are for investors and traders who are looking at the big picture and it requires a lot of patience for them to ensure that they wait for the right trading opportunities and enter at the most opportune time. Any mistake or impatience is likely to be very costly.