Interactive Investor

Is German DAX index about to fall 500 points?

17th December 2018 09:48

Alistair Strang from Trends and Targets

Just like fellow European indices, the DAX has taken a nosedive amid investor fear about global economic uncertainties. Chartist Alistair Strang reveals where Frankfurt is heading next.

Last reviewed over a month ago, the German index continues to explore the dark side. It's almost as if the weight of Europe is going to be on the country's shoulders alone for some reason...

We've a couple of slight changes to our grotty prediction. At present, two quite distinct arguments calculate with it achieving a bottom at 10,314 points.

However, if broken slightly, the decay could continue further downhill toward 9,944 points before a meaningful bounce can be expected. To escape this  doom, the market requires better than blue on the chart, presently at 11,700 points. 

One curiosity of note is circled. The uptrend since 2011 - a very tenuous trend - saw the index being gapped below at the open earlier this month, generally a pretty confident sign the market wants a price down.

Equally, if the market were to regain this trend, it'd be a pretty firm clue "someone" has changed their mind. As a result, recovery even bettering 11,105 at present will give a slight hint of a big drop no longer being certain.

Plainly put, with the DAX presently trading around 10,860, this gives a relatively tight stop position if feeling insane and able to chase the potential of further 500 point drops!

With the current politically charged European climate, markets and logic appear to be on different planets.

Source: Trends and Targets. Past performance is not a reliable indicator of future results

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