DAX about to move higher..?

DAX about to move higher..?

17. tammikuuta 2018 Autor Tradingportalen

German DAX index continues to consolidate, and might potentially be about to move higher. Long-term technical trend for the DAX and U.S market continues to show signs of strength. Technically this could open up for a potential higher move for the DAX, and in case DAX during considerable volume breaks resistance at 13 525, this might be a sign of further strength. On the other hand if the index starts showing weakness, and break support at 12670-12700, the index might be technically showing signs of potential further strength.

Last week German market had a slight deviating development. DAX-index closed the week at 13 245.03 with a modest move of -0.6 percent. This year’s gain is therefore limited to 2.5 percent.

Negotiations in the German government moved forward last week, decreasing political uncertainty within Germany. Talks between CDU, CSU and SPD on a new coalition government made a breakthrough. Parties have reached an agreement, which will however first and foremost must be approved by the social democratic party meeting, before any further formal government talks can be initiated.

Beyond this, the German market held ground mostly due to the strong euro against the dollar, generally awaiting upcoming earnings season. The euro relation to the U.S dollar is important for the German industries competitiveness, and therefore the market climate. On the flip side the U.S dollar has weakened over 5 percent against the euro since November high.

Upcoming earnings season has on the other hand possibilities to be strong, and due to the state of the market, domestically and internationally. It is on the other hand a whole different story if it can fulfill investors and analyst’s high estimates.

Technically for the DAX, the long-term view looks potentially strong, the index is trading well above its 40-week moving average, as well as making higher highs and lows.

Weekly chart of the DAX                                                                                                                                     

Within this technically strong trend the index is stuck within a consolidation. The index might trigger strength, in case it would start finding ground above resistance area around its previous all-time high at 13 525, preferably during increasing market activity.

On the other hand in case the DAX starts finding itself below significant technical support level at 12670 – 12 700, the index might be about to show further weakness, as it would then technically break a horizontal support level, as well as a positive trendline, alongside its 40-week moving average.

So far purely based on a technical standpoint the index seems to favor a potential positive breakout within its consolidation, though never a certainty of course. Long-term technical trend for the DAX together with the U.S markets looks to be strong, and the state of the market also looks like it might continue to show positivity.

Moving over to the daily chart below, the DAX shows a clear pattern of consolidation. Within this consolidation, there is an expanding triangle formation, moving price higher and higher. In case DAX breaks support around 13150 and 12680, the index might be looking at further weakness. In such a scenario, the lower support level might soon be located around its technically significant 200-day moving average, currently located at 12674.

Daily chart of the DAX

Short-term strength could be in the ballpark in case resistance at 13400 breaks, however if the index starts moving above resistance at 13525, the index could potentially be in a clearer situation.

Closing in on the time-frame, the hourly chart below shows that DAX last week triggered short-term weakness when support 13340 broke. Further weakness could potentially be triggered in case support at 13150 does not hold up.

DAX could however in the weakly chart potentially trigger strength in case resistance at 13300 breaks, closing in on support at 13340, as well as 13425.

Hourly chart of the DAX                       

Short-term resistance at 13300 might trigger further strength, closing in on the gap to resistance at 13400.

 

Important legal information

 

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

 

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

14.12.2019 3:26:10

 

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