DAX Index Crashes Lower On Continued Fears

There was no respite for the DAX index bulls yesterday as the index continued to be pummelled lower on the back of increase in risk and uncertainty in the Eurozone region. But there are some signs of these tensions thawing in the short term and we should be seeing some respite for the bulls in the upcoming days.

DAX Below 12600

The index had fallen lower on the back of uncertainty in Italy and this had led to a crash of the bond markets in that country. This led to the increase in the sprad between Italian and German bonds and this uncertainty began to spread all through the Eurozone region. It affected the euro as well but it looked as though the DAX would be the worst affected. Once the index broke through the 12800 region, it was clear that the bears would be in control and we had mentioned as much in our forecast yesterday.

The index continued to move lower during the course of the day and the opening of the US stock indices did little to support the index as it crashed through the 12600 region as well. Now we seem to have some support in the 12550 region which should hold the index for the short term but it remains to be seen how long the traders and the bulls would be able to manage to hold on to this support region in the short and medium term.

Looking ahead to the rest of the day, we are moving towards the end of the month and it is likely that the price action would get even more choppy in this period as we head towards the end of the month. There are likely to be monthly flows and buying and selling and this is going to affect the markets as well. But going ahead, we believe that this would settle down and the market should now consolidate for the short term.