DAX Index Daily Fundamental Forecast – August 11, 2017

The DAX index continued to move lower yesterday as the stock markets are clearly spooked by the rise in the war of words between the US and North Korea. Both have been escalating the tension and with either side threatening to attack the other, it has led to a risk off sentiment in the markets and it is only natural for the stock markets to drop under such circumstances.

DAX Crashes as Markets Spooked

While some traders and investors may view this as an opportunity to get into the markets which had been continuing to trade near the highs of its range for so many weeks, others may be way of the market continuing to drop further in the coming days. The DAX index had been sending enough signals of its weakness over the last couple of weeks and we had been mentioning the same in our forecasts as well. Yesterday, with the tension in the geopolitical sphere continuing, the European markets and the US markets got hit hard on all sides and the DAX broke through some important levels.

After crashing through 12100, we had expected some kind of psychological support around the round figure of 12000 but even that was not forthcoming as the index continued to drop and it closed the day below 12000 and it looks primed for further losses. The US stock markets crashed yesterday and this would mean that the DAX is likely to open in a weak manner for today and continue to trade weakly for the day.

Looking ahead to the rest of the day, we have the German CPI data coming in later but with the global sentiment overwhelmingly on the bearish side, we doubt whether any kind of reading would be able to help the DAX index in the short term. With the fundamentals continuing to dominate, we expect the index to trade weakly in the short term.