DAX Index Daily Fundamental Forecast – November 23, 2017

The DAX index finally came down to earth and faced some reality as the index crashed lower during the course of trading yesterday and closed the day below the 13000 region setting the stage for a close battle between the bulls and the bears to gain control over the index.

DAX Crashes Lower

Since the beginning of the week, the bulls had been in control of the index, although it was a strong surprise for many of the traders and the analysts as well. With the reports of the collapse of the coalition talks and with Merkel struggling to find another coalition partner, there has been a lot of confusion and uncertainty in the political circles and this was expected to weigh on the index. But this failed to happen as the DAX continued to move higher, after an initial fall as it broke through the 13000 region and moved higher towards the 13200 region over the last few days.

This had basically sucked in a lot of retail traders into believing that the bull run was well and truly on but the turnaround came about yesterday. Merkel is scheduled to meet the leader of the FPD party to try and get them onboard again but this did not seem to satisfy the DAX which finally collapsed under the weight of the uncertainty and the index is not in a very risky territory. It could swing either way depending on the political developments over the next couple of days and traders would be well advised to stay on the sidelines and watch what is going on before entering into the market.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone or Germany but the focus would be fully on the political developments in Germany and the meeting between Merkel and the FPD party leader would be watched very closely. Any sign of the coalition talks progressing well again could boost the DAX again but this would only add to the volatility and choppiness.