DAX Index Forecast – DAX Steady But Downtrend Likely to Continue

The DAX index had managed to crack the 12600 region over the last 24 hours in a move that continues the correction of the downtrend that we are seeing currently in the index. This might seem a surprise to many traders that we talk about a downtrend when the prices and the index have rebounded strongly from the lows but we believe, as we had mentioned in our forecast yesterday, that the index continues to be in a downward spiral.

DAX Likely to Come Under Pressure

As we had said yesterday, none of the factors that caused the index to fall over the last week has changed to any extent and hence we believe that the next phase of the downtrend is just around the corner. That is why it is important that the traders and the investors do not get carried away by the upward correction that we are seeing now. Of course, the investors are also likely to be misled by the US markets which continue to climb over the last few days.

This is fundamental as the US continues its policy of imposing more and more tariffs on goods that are being imported from other countries, especially China. This is only going to benefit the US companies in the medium and long term and that is why we are seeing the stock markets over there, rising over the last couple of weeks. It is apparent that the European companies and many Asian companies are going to be affected in a strong manner as the trade war begins to spread and that is why we believe that these markets would be in a downward spiral during this period.

Looking ahead to the rest of the day, many of the major Asian markets have had a bad opening and hence we believe that the DAX is also likely to have some of the same. We believe that the DAX would start the day on a weak note and though there might be an attempt to move higher during the course of the day, it is unlikely to last long as the trend is clearly down.