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.

DAX is flying high

The Quantitative Easing (QE) and the weaker euro have boosted up the German stock market in the recent weeks.

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_bull 2
Source: Bloomberg

As a result the DAX has reached one all-time high after another. In spite of the strong performance the German blue chips are overbought. However the investors are still waiting for a correction.

The Bollinger bands, the relative strength index (RSI) and the slow stochastic show an overbought situation. But in a strong trend phase the market can stay in such extreme areas for several days. Only when the oscillators have left the extreme areas and fall below 70 (RSI) and 85 (slow stochastic) will the consolidation begin.

In this case the upward trend line at 11,700 would be the first target of the correction. Below this level the support at 10,454/10,467 could be tested. The next significant support is at 11,022/10,846.

The midterm outlook is positive. Above the highs at 11,853/11,861 the psychological resistance at 12,000 would be the target price.

German stock market DAX on daily basis

DEM_DAX_AUM_120315
Source: IG Charts

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

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.