DAX Forecast October 31, 2014, Technical Analysis

The DAX as you can see initially fell during the course of the session on Thursday, but found enough support near the €8900 level to bounce and form a nice-looking hammer. This hammer of course suggests that the buyers are coming back into the marketplace, and we cannot help but notice that the European markets in general all formed hammers, which means that they should all start to find buyers coming back into the marketplace, with that, we like buying this market on a break of the top of a hammer, which is the €9150 level.

Another thing to pay attention to is the fact that the €8900 level had previously been resistance, and now looks very supportive. Because of that, we believe that the market will eventually go much higher, probably to the €10,000 level given enough time but we do recognize that there are a couple of places along the way that could cause a bit of an issue. For example, the €9500 level could cause a problem based upon the fact that it is a large, round, psychologically significant number. Above there, the €9800 level did offer resistance previously, so we don’t see that being any different this time, so we would anticipate a bit of a pullback there, but we believe that will ultimately be a buying opportunity as the market should attract buyers again and again.

The shape of the hammer is perfect, and we do like that and as a result we are bit more comfortable buying this particular market over many of the other European ones, although they all look very bullish. Remember, the DAX is one of the first places that you will see buyers step into the European markets, as it is considered to be one of the more stable ones. With that, we believe that the DAX should continue to go much higher, and as a result are very bullish. We believe that the Euro declining in value will also continue to offer support for the DAX going forward. Because of that, we believe the market will continue to flow towards Germany.