DAX Forecast November 17, 2015, Technical Analysis

The DAX initially gapped lower but found enough support at the €10,600 level to turn things around and reach towards the €10,800 level. This was more than likely in reaction to the Parisian terror attacks, but quite frankly that was a bit of a “knee-jerk reaction.” Ultimately, longer-term and cooler heads prevailed, and we reach higher. Below this area at the €10,500 level, we anticipate quite a bit of support as the market should see plenty of buyers in that area as it was such a significant breakout to the upside. After all, we not only have the large, round, psychologically significant number and the €10,500 level, we also have the gap, and of course the actual breakout itself. Ultimately, the DAX should then reach towards the €11,000, but it might not be the easiest move to make. After all, there will be a lot of nerves in Europe, so any sudden rumors could move the markets in a very volatile manner.

Ultimately though, we believe that breaking out to the upside since this market into the next leg higher, but that doesn’t mean that there won’t be pullbacks from time to time. It really comes down to your timeframe at this point. If we look at the short-term charts, this should offer several “buy on the dips” type of situations, and therefore short-term traders will continue to enter the market again and again. However, if you are a little bit of a longer-term trader, a supportive candle in this area should be a nice buying opportunity for the longer term. Also, if we can break above the €11,000 level, the market then will try to reach towards the €11,700 level. Either way, this is a market that should find plenty of support below. At this point in time it’s hard to imagine selling. After all, the impulsive candle that led to the breakout above the €10,500 level should have plenty of buying pressure in that range as well, so the DAX looks as it’s offering value in the current levels and of course after the pullback.