DAX Daily Fundamental Forecast – February 17, 2017

DAX has been reduced into an instrument of very little action over the past week. But what this lack of action also indicates is that we are likely to have a breakout very soon and the more ranging and consolidation we have, the more explosive is the breakout going to be. But it remains to be seen in which direction the breakout would be and if and when it comes, whether the breakout would hold and whether the bulls and bears would then be able to seize on the breakout and build on it. These are the questions that remain on the minds of the trader and this is probably one of the reasons for the lack of volatility in the index as the traders await direction.

The DAX has been unable to find any specific direction ever since the beginning of the year. The fact that the US stock markets have moved on higher and higher from strength to strength shows that they have reconciled to the fact that Trump and his team are here to stay and that they need to believe in his policies of protectionism and improvement in spending and growth in jobs. But the overseas investors are not so sure about Team Trump as yet and this uncertainty and fear is reflected in the global markets and especially in the DAX which has been trading within a tight range for so many days now. As we have been saying, the more it ranges, the more difficult it would be for the bulls to continue the bullish run.

Looking ahead to today, we do not have any major news from Germany or the Eurozone and so we can expect some more consolidation and ranging with a bearish bias for the rest of the day, especially as the US stock indexes closed on a slightly weak note yesterday.