DAX Index Price forecast for the week of July 31, 2017, Technical Analysis

The German index initially tried to rally during the week, but turned around and formed a somewhat negative candle. We are sitting just above the €12,100 level where I expect to see a significant amount of support. At this point, I believe that the €12,000 level is absolutely vital for the uptrend to continue. If we break down below there, it’s likely that the DAX will drop to the €11,500 level next, and then eventually the €11,000 level. Ultimately, I think that we could see a bit of a bounce from here, but keep in mind that a lot of this has to do with currency headwinds.

EUR/USD

The EUR/USD pair of course offers significant amounts of headwinds at times, as the markets focus on the expense of German exports when the Euro rises in value. The DAX is heavily laden with German exporting companies, and that of course works against their potential profitability. If the EUR/USD pair continues to rally significantly, it’s likely that we will see this market break down. However, if we break above the top of the candle for the week, that could be very bullish. Keep in mind that some of the reason that the EUR/USD pair is rising is that the European Union is starting to show signs of strength again. Ultimately that’s a good thing, but we may need to correct the recent bullish run before we see the buyers come back in that scenario. I am cautiously optimistic, but recognize that a breakdown below the €12,000 level is very important and should not be ignored.

DAX Video 31.7.17