DAX Index Fundamental Analysis – week of March 13, 2017

The DAX had a very tight and rangy week of consolidation as the bulls sought to chew on their gains made during the previous week when they were finally able to break through their range highs and hold on to their gains, which should encourage the bulls even further. As pointed out in one of our earlier forecasts, there was a break in the range sometime back as well but the bulls were not able to hold on to their gains and the index fell back into range in due course of time. This time it is different though.

DAX to Continue to Consolidate

Last week, the fact that there was not much news in Germany also contributed to the loss in volatility in the index. As long as the bulls manage to hold the index above the 11900-950 region, the buyers should be able to heave a sigh of relief in the hope that the consolidation is happening for the next leg of the bull run which should push the index towards 12350. It should be noted that the bulls have been able to consolidate their gains despite the fact that the stock indexes in the US have not had the best of times last week but the DAX index has been able to shake off all that and focus on consolidating for the next march ahead.

Looking ahead to the coming week, there are some minor data releases from Germany like the economic sentiment data and the final CPI and we also have Draghi making his speech but the focus will be well and truly on the FOMC rate announcement and the following statement when the markets expect the Fed to hike rates and also sound out a hawkish note in the statement. If this happens, we can expect the stock markets to rally a bit but not by much as the hike and the hawkish note have already been priced into the markets. In the coming week, we expect the DAX index to continue to consolidate with a bullish bias.