DAX Index Likely to Consolidate

We saw a strong recovery of sorts in the DAX index yesterday as the bulls tended to get some relief from the pounding that they had received since the beginning of the week. What was expected to start as a good promising week turned out to be a nightmare and the bulls are still left picking the pieces in a slow and steady manner.

DAX Under Pressure

The Italian crisis seems to be resolving itself in a slow and steady manner and this has helped the markets to recover over the last 24 hours at the same pace. The euro and the markets in the Eurozone had fallen lower on the back of uncertainty and confusion in the Italian political circles and this confusion spread into their markets affecting the bond markets. This once again brought into question the stability of the markets in Europe and led to the fall of the DAX.

The index fell below the 12600 region at one point of time and it appeared as though the support had broken and that the move would continue  lower. But we did see a lot of bottom fishing as the index fell lower and this, along with the recovery in the risk within the markets in general, helped the index to recover and close the day above the 12700 region. The bears continue to remain in control of the market and we believe that this is only a correction of the move lower.

Looking ahead to the rest of the day, we do not have any major fundamental or economic events that is likely to affect the index at this point of time but this is the last day of the week and hence some month end flows are likely to be seen in the markets. We believe that we might see some consolidation and ranging as the market awaits further developments and the traders and the investors would be looking ahead to see which direction they have to take.