DAX Daily Fundamental Forecast – October 11, 2016

It was a bullish day for the DAX yesterday as the index broke through different resistances and basically recovered all its losses from Friday as a risk-on sentiment returned to the markets which was evident through the weakening of the yen and the strengthening of stock markets that were open yesterday. This was good news for the DAX as it started the day brightly and continued its bullish bias throughout the day with not much weakening during any part of the day.

The index broke through 10500 and then continued its journey towards the strong resistance at 10580 which it eventually managed to break through and then it finally was stopped by the large number of sells lurking at 10660. As we had mentioned yesterday in our forecast, as long as 10700 is intact, we continue to believe that the index will visit 10280 in the short term. With the index now at 10620 as of this writing, it is definitely going to be a battle between the bears and the bulls for today and tomorrow as well with the bulls looking to take the index beyond 10700 so that they can continue with their bullish run and ensure that this phase is just one of consolidation compared with the larger bullish trend.

As for today, we have the German ZEW Economic sentiment to be released and though its impact on the currency markets will be less, it is viewed as an important economic indicator as far as Germany and its economy is concerned and this could have an impact on the DAX. Those who are bearish on the index can use this opportunity to short the index on the open with a stop loss just beyond 10700 looking for a correction towards 10280. Make sure that the trade sizes are appropriate and you give ample space for the price to move around before its hits your SL as very tight stop losses are known to destroy good trades.

Check out our real-time Economic Calendar