DAX Index Price forecast for the week of February 5, 2018, Technical Analysis

The German index fell apart during the week, reaching down towards the vital €12,800 level. This is an area that has been resistance in the past, so it makes sense that it could offer a bit of support right now. However, the candle is very negative looking, and I think that there will be an attempt to break down. If we break down below that level, we could drop to the €12,500 level next, followed by the €12,000 level below there. That level should be rather supportive, and I would be a bit surprised if we managed to break down below it. If we did, that would be a very negative sign, and could have more momentum to the downside. I believe that happens, we will see a general selloff in the stock markets worldwide, as there are concerns about bond markets right now.

However, short-term traders may come in and make a stand at the €12,800 level, and therefore it might be difficult for the longer-term trader to see this move. We could very easily find ourselves trying to go sideways between €12,800 on the bottom, with the €13,500 level on the top. Ultimately, this is a market that I think will be volatile, but if you take small positions initially, you can ride out a lot of the volatility. After the jobs number on Friday, we did start to see signs of buying again, so I suspect that traders are coming in to try to make a stand.

DAX Video 05.02.18