DAX Forecast October 3, 2014, Technical Analysis

The DAX fell hard during the session on Thursday, as the €9400 level offered too much resistance. The market sliced below the €9200 level during the day as well, and as a result it looks like the DAX is going to continue to sell off. This was probably in reaction to the less than aggressive stance that the ECB took during the interest-rate decision, and as a result this is probably a knee-jerk reaction more than anything else. With this, we believe that there is enough noise between here and €9000 to potentially offer support. Because of that we are looking to buy the DAX on value, but we need to see the supportive candle first in order to do so, something that certainly isn’t there yet.

That isn’t to say that we won’t get it later today, but we will have to wait until the market closes in order to do so in our opinion. Because of this, the market looks as if it is probably best left alone for the next 24 hours, but ultimately we believe that either the Friday or the Monday session could give us the signal we need in order to start going long. The €9000 level should continue to be the floor in this market, and certainly even if there is a significant amount of bearish pressure in the European Union, the DAX considered to be the “safest” stock market to invest money in.

We believe that the €9000 level will of course attract a lot of buying pressure simply because it was not only the area that the market bounce from previously, but the fact that it is a large, round, psychologically significant number that of course will attract a lot of attention in the markets. Ultimately though, we need to see something between here and there in order to go long, but once we do, we think that the market will more than likely return to the €9500 level given enough time. Ultimately, we still like the DAX but recognize that in the short-term it might be difficult to be involved in.