DAX Index Daily Fundamental Forecast – May 26, 2017

The DAX index continues its slumber, as we have been pointing out since the beginning of the week. Last week, we had a major correction in the index which pushed the index from above 12800 towards the strong support in the 12500-550 region but ever since that time, the index has been in a consolidation mode with no intention of moving in any direction anytime soon.

DAX Continues in Slumber

The sellers of the index have not had enough momentum to push the index through the support region and in fact, they would be disappointed that they did not use the momentum generated last week, which was born out of the political turmoil in the US, to push the index further down and with the buyers being able to hold the support region, we believe that the market is preparing itself for the next leg upwards. We have our target at the 13000 region but for now, it looks too far away to think about it just as yet.

We are also entering into a phase where the markets have begun to focus on the Fed and on whether it would hike rates in June and this theme is likely to dominate the markets in the short term. The German economy continues to throw up some strong data, so much that the market has now become inured to the incoming data from Germany and has started looking for global cues to determine the next direction. We also have the upcoming elections in Germany in the second half of the year and this should keep the index volatile.

Looking ahead to the rest of the day, we do not have any major news from Germany for the day and so we can safely expect some more consolidation and ranging in the DAX for the day.