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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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.