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DAX Fundamental Analysis – week of April 24, 2017

By:
Colin First
Published: Apr 23, 2017, 14:29 UTC

The DAX had a pretty difficult week and the trading was choppy as the traders were not sure on which direction they should be pushing the index. One set

DAX

The DAX had a pretty difficult week and the trading was choppy as the traders were not sure on which direction they should be pushing the index. One set of traders continued to believe in the bullish trend that we have been seeing in the index for the past few months and they helped to keep the index from correcting too much while another set of traders have been indecisive as they believe that the index is too high and the fact that it has not progressed much over the past couple of months should be a matter of concern and must be a signal that the bull run is slowly tiring itself out.

DAX In Consolidation Phase

Last week, we saw the stock markets choppy around the world as there were rocked by a couple of news events. One of them was the announcement of snap polls in the UK in June which was viewed as a positive signal for the UK stock markets as it is likely to lead to an even stronger government. On the other hand, the DAX was not too enthused by the news as it would mean a stronger UK PM May at the negotiating table for the Brexit and this would be a huge challenge for Merkel and other Euro leaders to deal with. This could also force them to concede a few deals which they would not have accepted with May having a weaker mandate as she is now. This saw the DAX weaken below 12000 and it visisted the strong support region at 11950.

DAX Weekly
DAX Weekly

There was some consolidation and ranging in this region and we had mentioned in our forecast that we could see a bounce from this region and thats what we saw towards the end of the week as reports came in that Trump was likely to announce a new tax plan as early as next week. This cheered the US stock markets and this rubbed off on the DAX which climbed back above 12000 to close the week.

Looking ahead to the coming week, we have the French elections going on and a defeat for Le Pen could boost the DAX index temporarily. But do not expect too much of a bounce following the news. Apart from this, we do not have any major news from Germany but expect the stock markets to focus on the tax plan announcement from Trump and we can expect the DAX to be bouyed leading up to the announcement.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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