This information has been prepared by IG, a trading name of IG Markets 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.
December saw Germany’s blue-chip index finally manage to break above the 10,780-10,830 resistance zone, after trading sideways for several months. It had to retest November’s intermediate high of 11,435 several times, but now these two important milestones have been cleared the psychologically important ‘round number’ of 12,000 is within view.
In front of this goal on the technical charts, the horizontal trendline is running at around 11,800, but should 12,000 be broken this would not be the end of the party on the Frankfurt stock exchange. Other targets will be the former upward trendline, which is below 12,165 points at the beginning of January, and the 2015-record high at 12,400.
Since the break from the sideways trading zone at the beginning of December, there haven’t been any corrections lower. Any breather after the recent climb would not be surprising and would not signal a broken trend from a technical point of view. On the contrary, investors could use any pullback to get started.
In the medium-term, the DAX has more than five support levels that could serve as corrective targets. In the case of a consolidation, 11,435 points would be the first resting place, while a shift zone was created around 11,401 to 11,484 points. The rising weighted 10-week moving average currently stands at 11,325, the horizontal trend line at 11,142/11,166, the crucial previous resistance zone at 10,780 to 10,830, and the weighted 40-week smoothing line at 10,705.