DAX: Final quarter has begun

After a very weak third quarter the investors hope for a strong final quarter.

bg_dax_1369829
Source: Bloomberg

In the past the German stock market has shown a strong performance in the period from October to December. This would be very helpful for the DAX.

Currently the DAX is in a bottom-building phase. Above the neckline at 10,000 (psychological level) the recovery could continue to the lower trend line of the downside trend channel at 10,250. At this moment the relative strength index (RSI) shows a bullish divergence on daily basis. 

German stock market DAX on daily basis

DEM_DAXUpdate_TA_011015
Source: IG Charts

The midterm upward trend line was broken down. But not significantly at this moment. The German stock market would generate a new sell signal with a closing price on weekly basis at 9.700. In this case the trend line at 9.000 would be the next technical target. Furthermore we have some concerns regarding the exponential 40 weeks moving average (EMA). The moving average has turned downwards.

German stock Market DAX on weekly basis

DEM_DAXUpdate_WO_011015
Source: IG Charts

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