DAX Forecast October 23, 2014, Technical Analysis

The German index gapped higher at the open on Wednesday, clearing the €8900 level. With that, it appears of the market should continue to go higher as the 8900 level was the significant barrier above that we were trying to get above in order to start buying. The last vestiges of any resistance will be found at the €9000 level, so if we can get above there we would be much more aggressive to the upside in our opinion. We believe that a move above €9000 since this market looking for the €9800 level, and perhaps even as high as the €10,000 level. Ultimately, the market should continue to be positive at this rate, and the fact that we gapped higher at the open certainly doesn’t hurt that case.

Remember, traders tend to like buying into the DAX when times are starting to turn back around to the good as it is one of the more “stable” market. The European Union of course is in a lot of trouble, but at this point in time Germany is probably the one loan area that we can feel relatively comfortable investing and even though it is off kilter at the moment.

Pullbacks at this point time should continue to see plenty of support below as it appears that we are certainly forming a base in this general vicinity. With that, we are bullish overall and have no interest whatsoever in selling this market as the DAX should continue to be one of the more favored places to put money in at the moment. With that, we think that the market will continue to be bullish but might be a bit choppy on the way higher, because there is of course quite a bit of selling pressure that we need to work through that expressed itself last month. Ultimately though, we do believe that the market will bounce back towards the highs again. Ultimately, we have no interest in selling as it’s almost impossible to imagine the move lower being easy to accomplish in this environment.