DAX Forecast November 5, 2015, Technical Analysis

The German index initially fell during the day on Wednesday, but found enough support at the 10,800 level to turn things back around and form a relatively supportive looking hammer. It now appears that the 11,000 level above will continue to offer resistance, but a break above that level would not only break above the top of the hammer, but it also breaks above a significant amount of resistance based upon a large, round, psychologically significant number. Ultimately, that should send this market looking for the €11,300 level given enough time, and of course higher than that given enough time.

We look at pullbacks as potential buying opportunities, as we gapped higher and above the €10,500 level a while back. That of course is a very bullish sign, and typically that means that the buyers will return with significant gusto at that level. Given enough time, the DAX should reach towards the €11,800 level again and beyond. Remember, Germany tends to be the leader of the European Union when it comes to stock markets and finances in general, so this could be the beginning of a return to European equities overall.

All things being equal, we are buyers and we have no interest in selling because we think that the €10,500 level will be essentially a “floor” in this marketplace. That floor very likely won’t be broken, and with this I believe that pullbacks offer value that have to be taken advantage of. Ultimately with fact, the market then reaches towards the highs yet again but keep in mind that there will more than likely be a lot of volatility between now and then. After all, the European Union continues to suffer in general, and although things are looking better, there are still a lot of potential headline scares out there that could move the market. On top of that, you have to keep an eye on the Euro, as if it suddenly starts to strengthen that could be a bit of an anchor around the necks of the European indices going forward.