The DAX index continued to consolidate safely above the important support region of 12550 during the course of Friday and the consolidation is set to
The DAX index continued to consolidate safely above the important support region of 12550 during the course of Friday and the consolidation is set to continue for today as well as the European markets await direction. The trading has been choppy over the last few days mainly due to the spectre of tapering from the ECB that is looming ahead and this is set to dominate the markets in the short and medium term as well.
This kind of choppy trading is bound to make it difficult for the traders but they need to get used to it in the coming weeks. We are also about to deal with many risk events which includes the Brexit negotiations which begin again today and this is likely to be watched very closely to see how difficult and tough it is going to be and which side is going to gain the upper hand. Rumors are likely to fly thick and fast and this is going to keep the traders on their toes.
We also await the German elections which are to be held in September and that is another risk event that the DAX has to deal with in the medium term. Though Merkel is clearly in the lead and hence likely to win, any kind of elections nowadays is likely to keep the market uncertain and under pressure and the DAX is also likely to suffer due to that. So, the clearing of the 12550 region has not solved the risk for the bulls just as yet and it remains to be seen what the next direction is going to be.
Looking ahead to the rest of the day, expect the consolidation and the ranging to continue for the day and this is likely to lead to choppy trading on either side of 12600.
Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.