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DAX Weekly
DAX Weekly

The DAX index had a tight week of consolidation in a week that culminates in the German elections. It is natural for the traders and the investors to feel a bit apprehensive ahead of the elections and that is why we have been seeing consolidation and ranging in the index over the past week. This consolidation has been going one for a few weeks now as the talk of QE tapering from the ECB has put the index under pressure but the improving fundamentals seek to push the index higher.

DAX Likely to be Bullish

The German data has always been tended to be strong and steady and this has always lent some good support to the DAX. But over the last month or so, every piece of strong data from Germany and the Eurozone has only brought the thought of tapering closer and hence we have been seeing the curious situation where every good data point has been adding more and more pressure to the index.

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Apart from the thought of tapering, the German elections, scheduled to be held on September 24, has also been hanging around the neck of the index over the last few weeks. Though it is clear that Merkel would win the elections in all probability and continue to emerge strong not only in Germany but also in Europe, the market has had its share of jolts when it had assumed things related to elections over the last couple of years. The investors do not want to make such a mistake again and hence await the elections and its results before committing themselves.

The upcoming week should be a very volatile one for the DAX index as the election results would be known by the end of Sunday and the market reaction to that would start on Monday and could see some volatile trading on the first couple of days of the week. We expect a win for Merkel and a bullish short term trend for the DAX index in the coming week.

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