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DAX: Correction is complete

The first quarter of 2015 was very successful. From January to March of this year the German stock market has reached price gains of more than 20%.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
bg_chart_674319
Source: Bloomberg

The reasons for the strong performance were the Quantitative Easing (QE) of the ECB and the weaker Euro.

The DAX has started a consolidation in mid-March. In this time the German stock market has formed a bullish flag as a short-term continuation pattern on daily basis. Regarding the breakout above the resistance at 11,930 the German Blue Chips has generated a new buy signal. The target price is the high at 12,221 from mid-March.

Although the DAX shows us a nice chart picture a further correction is possible at any time. For this case the German stock market has got some robust supports at 11,600 (23.6 per cent Fibonacci retracement), the trend line at 11,861/11,853 and finally the 21-days moving average (EMA) at 11,840.

German stock market DAX on daily basis

DEM_DAXdaily010415
Source: IG Charts

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.