DAX Price Forecast January 4, 2017, Technical Analysis

The German index rallied initially during the trading session on Wednesday, after initially gapping higher. The €13,000 level has previously been supportive, so now that we are testing it after the breakdown, it should be resistive. On an hourly chart, we have formed a shooting star, which shows that we could end up being a corrective move just waiting to happen. Ultimately, if we break down from here, I think the market will go looking towards the €12,750 level again. Otherwise, if we can break above the €13,100 level, the market should continue to go higher. I believe that the DAX will continue to be positive longer-term, but we will probably need to be careful in the short term.

With the EUR/USD pair rally, it could continue to put downward pressure on the German index, but at the end of the day I think it comes down to however the European Union is doing economically, which seems to be doing well. Ultimately, I think that the market is going to be driven by that given enough time, but in the short term I think traders are starting to worry about currency headwinds. With the US dollar falling in general, that almost always puts bullish pressure in the hands of the euro, so this could continue to be a slight drag. Although I do like the DAX longer-term, I recognize that you will have to jump in very slowly, so the €13,000 level becomes a very important.

DAX Video 03.01.18