DAX Index Fundamental Analysis – week of July 17, 2017

The DAX index had an interesting week as the stock markets around the world had a week of low volatility and ranging. The bulls in the DAX seemed to be down and out when the index broke through the key region of 12550 last week and for the first half of the week, it did look as though all was over for the bulls.

DAX Resumes Uptrend

There was a period of consolidation during the middle of the week as the pair ranged within a tight few points but it could not even get near the 12550 region during this period. The weakness in the DAX was brought about by the hawkishness in the ECB who had made it clear that the time for tapering was getting near as more and more incoming data showed a strengthening of the Euro economy. This would mean that the ECB would stop pumping funds into the market and this was bearish for the investors who began to withdraw from the markets.

Then later in the week, out came the reports that said that the ECB was still some distance away from tapering and that if at all they went ahead, it would be only after the summer and only after watching the incoming data to make sure that inflation was on track. This provided a relief to the bulls who then began to buy the stocks agressively which helped the DAX to push through the crucial 12550 region again and it ended the week clearly above the key figure.

This should encourage the bulls in the upcoming week and they would hope to capitalise on this momentum. But the talk of tapering and the subsequent action from the ECB is likely to be a constant threat in the markets in the short term and this is likely to lead to some choppy and whippy action in the upcoming week.