DAX: Look out for these warning signals

With Brexit possibly impacting German stocks, our chartist has an interesting forecast for the DAX.

The DAX, Germany

Our April analysis successfully gave upward targets for the DAX. For now, it seems there is a viable threat to exports if the UK Brexit thing goes ahead without trade agreements in place, and the chart for the Dax is certainly not terribly encouraging.

• Why it's an interesting time to trade the German stock market

To cut to the good stuff, weakness now below 11,550 looks capable of reversal to an initial unspectacular 11,250 points.

If (or rather when) broken, secondary calculates down at 10,775 points, along with a challenge of the market uptrend since 2011.

Only a break of this uptrend would justify some real hysterics as the index would shuffle into a zone where 7,100 presents a fairly reasonable longer-term bottom.

We'll admit, currently, 7,100 does not appear visually likely. Instead, we suspect 10,775 shall provide some sort of bounce in the months ahead.

To get out of this mess, the index needs better than the blue line on the chart, 12,650 at time of writing.

If we look for early warning signals which will suggest a miracle, Germany requires better than 12,160 as this will suggest coming recovery to 12,400 points.

Better still, movement above this level calculates with 12,950 along with the promise of further strong recovery.

For now, it's regarded as heading to 10,775 eventually!

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.