Yesterday saw the DAX Index begin to challenge new highs around the 13040.000 juncture, but then get hit by profit-taking as afternoon trading progressed. Global indices, particularly the big stock exchanges in the US, are fueling speculative fever. Trading conditions are likely going to be fast-paced the remainder of this week. The selling reversal within the DAX Index ending yesterday’s trading has opened the door for speculators who are keen on participating and looking for buying opportunities because of its current price levels near the 12900.000 mark.
Support near the 12850.000 could prove solid. Unfortunately, while fast trading conditions prevail; this juncture might not prove a logical entry-level for speculators looking to buy the DAX Index. Buying the DAX Index near the 12900.000 may have to be contemplated for traders who are afraid to miss a possible launch higher. However, while speculative market conditions dominate, speculators may want to practice patience and look for entry levels within the 12880.000 to 12890.000 levels.
The problem for speculators is that when market conditions are fast and there is a belief in a prevailing trend, entering buying positions becomes a gambit. Because if you believe the DAX Index is going to traverse higher it could prove costly to sit on the sidelines and not enter the market now. Resistance has proven capable near the 13040.000 level in the short term and last week the 13100.000 mark certainly produced a downward reversal.
However, risk appetite and behavioral sentiment should be considered within current market conditions. While some traders may believe equity indices including the DAX Index are overvalued, technically it is hard to argue against the bullish trend which remains more than adequate. Yes, the DAX Index may continue to see stark reversals downwards, but these may only follow after additional stronger gains have been generated.
Traders looking to short the DAX Index should have their stop losses in place to protect against the market’s ability to sustain higher thrusts upwards and breakthrough resistance. Fast trading cannot be discounted and risk management is vital.
Speculators who seek to pursue the bull trend upwards cannot be faulted, but they should also be ready to cash in short term profits. Buying the DAX Index is justifiable, but traders need to have their exit strategies in place and not let profitable positions erode due to greed.
DAX Index Short Term Outlook:
Current Resistance: 13050.000
Current Support: 12840.000
High Target: 13100.000
Low Target: 12800.000
