DAX Index Price Forecast December 20, 2017, Technical Analysis
The German index gapped higher during the Monday session, but now has retraced to try to test that gap for support. Typically, it will hold, but I don’t know if we need to fall in order to fill the gap. I think that given enough time, we should see buyers jumping into this market and push the DAX towards the €13,350 level. I believe that the €13,000 level underneath is massively supportive, as it is a large, round, psychologically significant number, and it of course has been structurally supportive as well.
Longer-term, I believe that the €15,000 level will be targeted, as it makes a nice large target. In general, we have a serious issue with liquidity over the next several sessions, so I think that the market should be approached rather cautiously, as we have the ability to see sudden moves if big players get involved, perhaps either hedging some type of risk, or taking profit at the end of the year. When they do this, your profit and loss statement won’t differentiate as to the reason, just the fact that you have gotten slammed. Because of this, if you are going to trade the DAX, just like any other market this time a year you should be looking for small positions to add to longer-term if you realize gains.
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On the outside chance that we break down below the €12,900 level, that would be a very negative sign and could send this market much lower. As things stand now, I believe the buyers are coming sooner rather than later.