The DAX on the daily charts has bounced from a very good support present at 8910. Yesterdays’ trading session saw a gap up opening and sustained buying which pushed the index higher by 2 percent approximately. This buying momentum was seen after days of a down-trending move which had pushed the DAX below all important support levels which was a huge cause of concern for traders. Many believe that the bounce back from support levels is a sign of confidence as buying has emerged at important levels for the index. The index has also taken support at the lower end of the Bollinger Bands which also indicates that sustained buying can take the index higher. The first level of resistance for the DAX would be around 9469 which is the upward sloping trend line.
On the weekly charts, DAX has bounced back from critical support areas, as many believed that if the DAX had broken the support zone, it would have led to a minimum correction of 10%. The momentum indicator for the weekly chart are in bearish territory and haven’t any signs of a reversal which is a cause of worry for many technical chartists and therefore the support zone at 8910 is being clearly watched.
The rally on the DAX was largely due to the subsiding fears from the geopolitical risks. As the Russian troops stepping back from the Ukraine border was seen as a huge positive for European stocks. Investors would be closely watching at news coming out of Germany with regards to the ZEW business confidence index to understand the state of the economy. This report to be released on Tuesday is very closely watched by economists and investors alike, to gauge the economic sentiment in the economy which is crucial for the future course of action for the DAX