DAX Index Fundamental Analysis – week of May 7, 2018

It turned out to be a great week for the DAX index, a week where the bulls managed to follow up on their effort from the previous week. The index managed to break through the long held range and the bulls did the rest by ensuring that the break higher was made to stick and that they managed to build on it even further in due course of time.

DAX Breaks Through Range

As a result of that, the index has managed to climb through the 12800 region to close the week and it points to further gains in the coming week. There has not been much by way of economic data for Germany over the past week but the general improvement in the risk sentiment along with the fact that there is an increased expectation that the QE would be continued for longer than expected has kept the index buoyant and all that the bulls needed to do was to push it higher.

They have managed to do that as more and more traders and investors have been encouraged by the positive developments in the Eurozone as far as the stock markets are concerned and this has helped to fuel the move higher even more during this period. The index is likely to face some stiff resistance as it move towards the 13000 region in the upcoming week and that could lead to some correction and consolidation which should push the index back towards the top of the range that it had broken through.

In the upcoming week, there is not much by way of economic data except for the manufacturing production data from Germany. With that being the case, we are likely to see some consolidation in the index in the coming week which could also translate into a bit of a correction which could push the index back into the highs of the range in the 12600 region. As long as the highs of the range hold as support, we should be viewing this only as a correction and prepare ourselves for the next bullish leg.