DAX Index Daily Fundamental Forecast – December 28, 2017

There has not been much action in the DAX market and this is something that was expected as we are in a holiday mode as far as the markets are concerned and hence there is likely to be very less liquidity and even the moves that take place cannot be taken into account as they are likely to be reversed anytime.

DAX Moves In Tight Range

This is one among the many reasons why we are seeing the DAX being caught within a tight range. The other reason is the delay in the formation of the coalition government in Germany which is also adding pressure to the markets. After seemingly clinching it, Merkel is now struggling to cobble together a coalition and this trouble is likely to continue for her even in the new year. The longer it gets delayed, the more is the possibility that it will collapse and this is a possibility that Merkel or Germany would not want.

This part of the story is likely to continue in January as well and so we do not expect any major moves in the DAX in the short term. We are likely to see the index continue to trade in a consolidative manner with total lack of direction as many of the traders are still not yet back at their desks and hence the volatility and the liquidity have been affected.

Looking ahead to the rest of the day, we do not have any major news from Germany or the Eurozone and so it is only logical to expect the consolidation to continue in the index. We believe that the index would trade below the 13100 region for much of the time as the traders look forward to the next long weekend. The liquidity can be expected to pick back up only from the second week of January.