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DAX Forecast: DAX Continues to Look Strong

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.

It now looks as if the buyers are going to win the day.

  • The DAX initially pulled back just a bit during the training session on Thursday, but he continues to see a lot of strength as we have turned around to rally.
  • At this point, it looks like we are trying to break out of some type of bullish flag, and therefore to be very interesting to see how this plays out.
  • If we can break above the €17,000 level, I think that the DAX could continue to go much higher, perhaps even take off with a bit of “FOMO.”

Dax Forecast Today - 26/01: DAX Continues to Look Strong (Chart)

All things being equal, if we do pull back from here, I think there are plenty of buyers underneath that will come in and pick the DAX market up, with a special emphasis on the €16,500 level, which of course is a psychologically important figure, but we also have the 50-Day EMA racing toward that level, and it is the bottom of the flag.

If you were paying attention to me yesterday, I suggested that perhaps we were going to see a big move one way or the other and eventually take off. I wasn’t sure of the direction because it looks like we have a little bit of a broadening pattern, but it now looks as if the buyers are going to win the day.

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Potential Targets

The potential targets will be the €18,000 level, possibly even the science of the €20,000 level, as the bullish flag has such a huge pole attached to it. All things being equal, this is a market that I think continues to see plenty of values every time they pull back, and the pullback will continue to attract more and more money. After all, it looks like the German economy going into recession has people expecting that the European Central Bank will loosen monetary policy. In general, this is a situation that we see in New York all the time, if the central bank is likely to loosen monetary policy, people throw money at stocks and celebrate a poor economy. This is going to be the case going forward.

That being said, if we were to break down below the 50-Day EMA, then we could drop down to the €16,000 level, which is where we had seen some consolidation previously, and of course the 200-Day EMA comes back into the picture as well.

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Christopher Lewis
About 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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