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Dax Forecast: DAX Extends Gains as ECB Rate Cut Looms

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • Taking a look at the DAX you can see it is rallying during the trading session on Tuesday as we head into the Wednesday session.
  • It looks very strong, and I think short-term pullbacks will continue to be buying opportunities in an index that has been like a wrecking ball to the upside.
  • Keep in mind that the ECB has a meeting on Thursday, but it is expected to cut rates.

So, a lot of people anticipate that the easy money out of the European Union will continue to help equities. And of course, the DAX being German is one of the first places people go looking for equities. Furthermore, we also have to keep in mind that the German economy is one of the best performing ones in Europe at the moment. So that's another reason to believe that the DAX will continue to be strong.

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On a Pullback

If we do pull back from here, I believe that the 21,000 level is a significant support level, as it is a large round psychologically significant figure, and of course it's an area that has proven itself over the last couple of days. I have literally no reason whatsoever to think about shorting the DAX anytime soon. And I think it will probably drag most European indices higher right along with it, such as the AMX in Amsterdam, the MIB in Milan, the Spanish index - the IBEX, the CAC in Paris, you name it.

Dax Forecast Today 29/01: ECB Rate Cut Looms (graph)

I think they are all going to start heading in the same direction, but the DAX is always the key, as it is the biggest and most important index in the EU. This should continue to be the case, and at this point it should continue to be the main driver of EU stocks. This is a market that has a lot of momentum at the moment, and this isn’t changing anytime soon.

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Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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