DAX Index Fundamental Analysis – week of October 23, 2017

The DAX index completed another week where it did not do much though it tried its best to breakout in either direction. This is the second week in a row that the index has been unable to make a move in any specific direction and this has now begun to cause some concern among the bulls who would have expected the index to make the break higher and push through 13000 and beyond quite easily.

DAX Still Stuck in Range

The index had made some strong and quick progress through the 12600 region and it approached the 13000 region quite strongly and confidently as well over the last month. It also broke through the previous all time highs and at that point of time, it appeared only to be a matter of time before the DAX broke through 13000 and move further higher. But since then, it has come under some renewed pressure from the fact that the elections threw up a situation where Merkel could not get the majority that she desired. It is also under pressure due to the QE tapering talk and also the tension in the Korean region as well, which has been affecting all the major global markets.

A combination of these events has made the further progress in this index quite difficult and we have been seeing some choppy and ranging trading over the last couple of weeks. Last week, we did see a something that appeared to be a breakout but it was promptly met by a lot of selling due to some weak data from China and this has been the trend over the last couple of weeks.

Looking ahead to the coming week, it is probably the last chance for the DAX index to break through the 13000 region before the bulls and the other traders become too tired of this consolidation and see returns elsewhere. This could lead to profit taking and once the index starts moving lower, then it could lead to further selling in the index which could lead it even lower. This is something that the bulls would not want and the onus is on them to do something, in the last week of the month, to push the index higher so that it can join the other major global markets in their bull run.