DAX Daily Fundamental Forecast – January 13, 2017

We had mentioned in our forecast yesterday that the DAX is likely to begin the day yesterday in a bearish manner as the US stock markets had closed weakly in the previous day and that is likely to rub off on the DAX. This is what we saw yesterday as the DAX opened weaker and continued to trade weaker during the course of the day as global fears over the Brexit process, the dollar, Trump and oil prices dominated the headlines around the world and this led to a risk off mode for a large part of the day and led to a correction in the DAX.

In the process, the DAX came down towards 11400 and was able to cover the gap from the beginning of the year and from there, the index made a smart recovery as the global fears receded a bit and the dollar also found a bid. We had mentioned that the filling of the gap would be a good place for the bulls to go long and we hope that the traders took the cue as the index staged a recovery from close to 11400 and made its way above 11550 and it sits there as of this writing. The US stock markets also closed strongly near their highs yesterday and this is likely to influence the DAX when it opens today and we are likely to see a bullish opening to the DAX and we may be in for the next leg of the bullish run in the index.

Looking ahead to the day, we do not have any major economic news from any part of the eurozone today and so the movement of the index is likely to be influenced by the local German factors and the fact that the global stock markets managed to make a bit of a recovery. We continue to believe that the DAX is likely to trade strongly in the short term.