DAX Index Daily Fundamental Forecast – July 26, 2017

The European stock markets seemed to be in recovery mode in general yesterday but the DAX bucked the trend and didnt join them. It continued to trade in a pretty weak manner for most of the day and even the unexpectedly strong business climate data from Germany failed to enthuse the markets. The DAX trades just above the strong support region of 12200 and the bulls would hope that it continues to be the case in the short term.

DAX To Continue to Consolidate

We also saw the oil prices move higher during the course of the day on the back of the OPEC announcement that Saudi Arabia would be cutting its oil output even more and this also helped to improve the investor sentiment in the markets but none of its seemed to have any effect on the DAX. But if the index manages to hold on to its support in the short term, we could see some buyers and investors to feel encouraged and confident enough to begin investing in the index again.

For now, the uncertainty over the Brexit process, the ECB stance on the tapering and also the elections in Germany in September seem to be too much to digest for many of the traders and investors and that is why we are seeing some choppy action in the index as they are still not clear on whether they want to buy or sell in the stock markets. We expect this consolidation and choppy action to continue in the short term as the markets await direction. The FOMC meeting minutes are the only important economic event of note, in this week, and we dont think that would have much impact on the DAX.

Looking ahead to the rest of the day, we might see a slightly bullish opening to the DAX on the back of improved market sentiment over the last 24 hours but we dont think it would be sustained during the course of the day and there might be profit taking later on in the day.