DAX Index Price February 5, 2018, Technical Analysis

German traders went sideways just above the €12,800 level, which is significant support and resistance on the longer-term weekly chart. The fact that we have bounced from here is a sign that we could try to go looking towards the €13,000 level, but quite frankly I think it is going to be very volatile on the way up. If it does work, you will probably start looking for choppiness going forward, and it will probably take a bit of work to get to the €13,000 level as we have seen such a drastic selloff over the last several days. However, if there is more of a “risk on” situation around the world, it’s likely that we will see the DAX go higher.

If we break down below the €12,800 level, the next target is probably going to be €12,500 after that, ultimately that would be an even more supportive level, but if we break down below there, the market would go hunting the €12,000 handle. If that happens, it will more than likely coincide with massive selling around the world in the stock markets, and it should be rather obvious that all markets are going to struggle. At this point, I anticipate that DAX will continue to lead the way for the European Union, but if there are concerns about the bond markets out there, it’s likely that stock markets are going to struggle a bit, especially with the DAX being so highly correlated to what’s going on in the German bond markets. If interest rates continue to rise in those bond markets, meaning that they are selling off, that has more money looking to pick up guaranteed gains as opposed to stocks.

DAX Video 05.02.18