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DAX Index Fundamental Analysis – week of January 22, 2018

By:
Colin First
Published: Jan 20, 2018, 11:57 UTC

The index closed the week on a strong note which should help spur the bulls even further in the coming week

DAX Weekly

The DAX index is set to move higher in the coming week, despite the uncertainties surrounding the government formation, as it closed last week above the 13400 region and with a clearly bullish undertone. Of course, there is likely to be a lot of developments over the weekend on the political front and this could put a spanner in the works for the bulls.

DAX Moves Higher

The week began quietly and the DAX was mostly on the backfoot during the first half of the week as the concerns over the government formation and the lack of progress in the coalition talks seemed to weigh on the index. As if this was not enough, we also saw that the prospect of QE being ended by the end of the year also weighing on the European markets. This led to a period of consolidation and ranging in the DAX during this period which kept the index around the 13200 region.

DAX Hourly
DAX Hourly

But as we entered the second half of the month, we could see a pick up in the momentum. We also saw some of the ECB members scrambling to ensure that the markets do not slide on the prospect of the QE being stopped and they issued statements to assuage the feelings of the market. This helped the DAX higher and it was clear that the bullish tone continued to underly the market as every correction was being bought into. Also, as we headed towards the weekend, there is increased anticipation of some deal being made in the coalition talks with the SPD party meeting over the weekend and this helped the index to push through the 13400 region.

In the coming week, the direction that the DAX is likely to take would depend a lot on how the talks pan out over the weekend and in the coming week as well. We also have the ECB rate announcement followed by the press conference and it is generally expected that the ECB would try and tone down its hawkishness regarding the stoppage of QE in an attempt to ensure that the euro does not run to high too quickly and also to keep the markets from falling. A combination of these events could help the index to move higher in the coming week.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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