DAX blows former targets out of the water

Price at time of writing – 9715.

There is no doubting the independent strength of Germany's DAX index, which has easily outperformed most other major share markets in recent months. 

The break above my former, once-aggressive, target band of 8942-9054 has been decisive too. In order to determine future targets, we must now project forward to the next band of aligned percentages. With stop-losses activated on the recent short recommendation, I begin coverage in 2014 with a neutral position.

Today's chart introduces the next two bands of projected upside targets. The first band is centred around the line representing a 100% advance from the lows in October 2011, and is defined as 10,207-10,306. The next, higher, band is potentially more significant, however, and forms from an alliance of three more potent projections – notably a line representing a 200% rise from the unique low in March 2009. This band is defined as 10,732-10,794. A move to this higher target allows the DAX scope for a further advance of over 10% from its current level.

Although my technical outlook on the DAX has improved considerably since last November, there may still be the opportunity to gain exposure in a lower-risk scenario. Indeed, a fall to within the parameters of my old target at 8972 cannot be ruled out, and would provide the perfect opportunity to go long.

Recommendation: neutral. Traders may buy on any fall to 9444

German DAX chart

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