We had mentioned that the DAX was likely to start strongly for the day yesterday based on the price action in the US stock markets on Friday which had a bullish day on Friday due to generally good data from the US. This is what we got yesterday in the DAX as the index opened higher for the day. But the crucial thing which we had mentioned was that it was important for the index to continue to hold on to its gains for the bull run to gain momentum and target 12000 but it failed to do that yesterday.
After having a strong start, there began a general risk off theme in the markets during the European session as the oil prices tumbled on general fears of the production cut agreement holding and also due to general fears surrounding the Brexit process. The confusion around the Brexit process really did manage to spook the markets and this caused the DAX to weaken during the course of the day as it crashed through 11600 and trades just above 11550 as of this writing. We are looking for further weakness in the DAX as a chance for us to go long on the DAX as we continue to believe that the index will have atleast another leg of the bullish run in the short to medium term.
Looking ahead to today, we do not have any major news from any part of the world today and so we expect the prevailing trends to dominate the moves of the index for today. Keeping this in mind and also noting the fact that the US stock markets closed lower yesterday, we believe that we will have a bearish opening to the index today and it remains to be seen how the buyers react to this kind of an opening. We believe that any approach towards 11440 should be met with some strong buying and this is something that we will be looking out for as well.
