DAX Fundamental Analysis – week of January 16, 2017

The GDAX finally had a volatile week after spending a couple of week consolidating its gains and looking ahead. Last week, we saw the first decent correction in the DAX for what seemed like an eternity. The DAX had remained strong despite all kinds of risks surrounding it in Italy and UK and in the eurozone in general and has been continuing to make highs and consolidating in the higher parts of the range for quite some time now.

Last week, we saw a fall in the markets for a brief while following the press conference from Trump in which he seemed to be as combative and as worried about himself than ever before. The markets had expected him to mellow down and lay the path for economic and fiscal policy during his press meet but it got none of these and this disappointed the markets. This was used by the pairs to push down the index and finally fill the gap from the beginning of the year. The bulls soon regained control and used this correction to load up on their longs for the next leg higher. We had suggested a similar approach in our forecasts as well and once the gap got filled, the index bounced back very soon and trades above 11600 as of the close last week and looks good for 12000 quite soon.

Looking ahead to the coming week, we have the ECB rate statement and associated press conference and this is likely to shake up the markets a bit with its volatility though we do not expect much to change. The ECB has made it clear that it will be in the markets for the whole of this year and so we dont expect any surprises from them in the coming week. The stock markets around the world continue to remain strong and we expect the DAX to share the same sentiment and continue to make progress towards 12000 in the coming week.