DAX Index Daily Fundamental Forecast – June 28, 2017

The DAX index fell through yesterday on the back of weak stock markets all around the world and also due to the general risk off mode in the markets which led to a sell off in the stock markets. Though the ECB struck a very positive note on the Eurozone economy, this wasnt enough for the DAX to build on and we saw the DAX and the other stock markets in the Eurozone turn bearish during the course of the day.

DAX Falls Through to Lows

We had mentioned this several times before where we had said that the longer the index spends in the highs of the range without being able to break through, the greater is the risk that the index may ulatimately fall and it is a sample of this that we are seeing now. The index closed the day just below 12600 and the main support comes in just below this as around the 12550 region. This marks the lows of the range, a range that has been existing for the past couple of months and a break of this would signal a real danger to the DAX.

The signs that the bulls were getting tired at the highs of the range was clear for everyone to see as every attempt at going beyond the 12900 mark was met by some strong selling which pushed the index lower. The range between 12550 and 12950 has been well established over the last few weeks and it remains to be seen whether the strong buying support at 12550 continues to exist even now or whether it will give way this time. If it does give way, then we should see the index move towards 12000 in the short term.

Looking ahead to the rest of the day, we do not have any major news from Germany but we have another Draghi speech today but with the US stock indexes having closed lower yesterday, we should see a weak opening for the DAX when it opens today and the key would be to see whether there is another bounce once again from the 12550 or whether the support is going to give way. A bounce would signify a return back to the range trading.