DAX Index Fundamental Analysis – week of April 23, 2018

The index has faced some selling near the highs of its range
Colin First
DAX Weekly
DAX Weekly

The DAX index had a middling kind of week as the index made its way to the highs of its range but there it was met with some strong selling as was widely expected. Last week, we saw that the risk sentiment around the globe tended to improve and this helped to keep the DAX buoyant for a large part of the week.

DAX Index In Middling Week

This improvement had come about due to the fact that none of the fears from the earlier week came to fruition. The market had feared that the trade war between the US and China would begin to escalate and spread all across the globe but that has not happened so far though the risks continue to remain underneath. On the other hand, there was also the worry that the war in Syria would escalate but that has also not happened so far with the firing of missiles by the US being viewed as an one-off instance at this point of time.

DAX Daily

The combination of these factors has helped the risk sentiment to improve during the first half of last week though there have been signs of profit taking and tired among the traders and investors during the second half of the week. This saw some selling which has since pushed the index lower and the fact that the stock indices closed in a weak manner in the US on Friday should have an effect on the DAX in the first half of the coming week which should see the index correcting even lower.

Looking ahead to the coming week, we have the rate announcement and statement from the Eurozone and it would be closely watched on what the ECB thinks about the QE program now. It has been trying to sound bullish as far as tapering and ending the QE is concerned but the incoming data from the Eurozone has not been able to support this view and hence, it would be interesting to see whether the ECB continues to be hawkish or whether it tones it down. Any sign of a tone down would be beneficial for the DAX and we could then see the index moving higher and probably even attempt a breakout.

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