DAX Index Daily Fundamental Forecast – September 27, 2017

The DAX index has got back to its tight ranging and consolidation ways as the results of the German elections continue to weigh on the index, as it has been doing since the beginning of the week. It has been trading in a tight range over the last few weeks and it has been unable to move out of this range during this period. We believe that this consolidation phase is likely to lead to a breakout sooner or later and considering the period of this consolidation, the breakout is likely to be a large one.

DAX Index Continues Consolidation

We had expected the consolidation to lead to a breakout following the results of the German elections but the fact that the elections were not enough to give a big majority for Merkel to form a government of her own has led to uncertainty continuing in the political circles of Germany. This prolonged phase of uncertainty has weighed on the index and continues to place it under pressure.

Even the formation of a coalition is unlikely to boost the index too much as the party that joins Merkel is likely to bring in its own agenda and make it difficult for her to continue to be the dominant force that she has been for Germany and for the Eurozone as a whole. This is likely to weigh on the minds of the investors when they decide to invest in the index and again, this is also one of the reasons why the index has been unable to break higher even during times when the rest of the global markets are moving higher.

Looking ahead to the rest of the day, expect some steady trading during the rest of the day while the markets and the traders wait for the next direction, which is unlikely to come towards the end of the month, as we are now.