DAX Forecast August 4, 2015, Technical Analysis

The DAX as you can see had a very strong session on Monday, breaking above the top of the €11,300 level. The reason this area is so important is the fact that we have formed two hammers previously that stopped right at that level. By breaking above that area and clearing the gap from several sessions ago, the market now shows real strength. With that, we believe that the market will have a little bit of resistance at the €11,500 level, but ultimately should continue to much higher. After all, the German index is one of the “safest” indices that we follow. In other words, if you are going to put money into the European Union, more than likely Germany is one of the first places.

We believe that pullbacks on short-term charts will be buying opportunities, and that this market is going to at least the €11,800 level given enough time. However, we believe that we will go much higher than that longer-term, and therefore are not even looking for selling opportunities at this point in time as we believe the €11,000 level below has become the new “floor” in this market. The German market got beat up right along with the rest of Europe due to the noise coming out of Greece, but now that the solution is in a fact, at least short-term, we believe that the DAX will continue to go higher as well as other European indices in general. The CAC looks especially interesting, and you have to keep in mind that the CAC and the DAX tend to move hand-in-hand as they are the two leading economies on the continent.

Keep an eye on the Euro as well, if it does continue to fall a little bit, that of course could be a boost for German exports, which should of course boost this market as well. Either way though, we believe that there is “value” in this market at the moment, and longer-term traders are starting to acknowledge this. Because of that, we think that every dip will be supported going forward.