DAX outlook improves

Price at time of writing – 9708.

In line with other eurozone share-markets, where my Gann-theory charts continue to seek higher, Germany’s DAX is also proving to be extremely resilient.

It is clear that a continuing shift in asset allocation is taking place across much of Europe, resulting in a revitalised appetite for equity investment. We should also be mindful, however, that a return of the retail investor also rings alarm bells.

This resilience has resulted in the outlook for the DAX improving markedly of late. Although the January pull-back measured a reasonably aggressive 7% (but fell shy of my anticipated 8.33% pull-back), the subsequent 6.25% rally has allowed me to consider raising the target on the index to a band defined as 10,207-10,250, with the key level now standing at 9637. Despite the DAX having closed above this minor resistance yesterday, it has not yet done so definitively. A retest, followed by some upside momentum, would provide me with the ideal trigger.

If we can hold above the 9637 level, a minimum target of 10,207 can be introduced. This would double the recent 6.25% advance and align the index with two other longer-term percentage lines of greater significance.

Recommendation: neutral. Buy the index on any dip to 9637.The target then becomes the band 10,207-10,250.

DAX chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.

Find articles by analysts