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%.

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

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.