DAX Daily Fundamental Forecast – January 23, 2017

The DAX index continues to consolidate near its highs, something which it has been doing over the past week or so. The DAX continues to look strong and its uptrend seems to be intact for now as the corrections have been few and far between and they have been met with some quick buying as well. The corrections have also been quite shallow so far which should give some hope to the bulls. On the other hand, the bulls should also note that the index has not been able to make much progress towards the 12000 in the past few days and the longer it continues to consolidate, the more is the risk that the weakness might arise which will push the index down.

A part of the reason for this consolidation is the uncertainty in the global markets surrounding the new administration in the US and also over the Brexit fears. The US stock markets have been a bit jittery recently on the new phase of administration that it is likely to face and the effects of this tension and uncertainty has been carried over to the European markets as well. This has kept the DAX under check and has been one of the main reasons for the DAX being unable to make any quick progress. We also have the Brexit process underway and though the UK PM May had laid out guidelines, the process is still fraught with several risks and this is also one of the reasons that is weighing on the DAX. But we believe that the DAX is still in an uptrend and that it is only a matter of time for the global risks to alleviate and once this happens, the index should continue on its way towards 12000 and further.

Looking ahead to today, we do not have any major news from the Eurozone apart from the monthly Buba report from Germany which is unlikely to bring in any major volatility. We expect the DAX to open bullish for the day but we have to wait and see whether the bulls are able to hold and push on the gains.