Trend Stays Bullish as Doubters Grow Nervous

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The DAX Index has opened with a small dip downwards in early trading today, but this move follows a rather strong bullish trend which continues to exert itself.

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The DAX Index remains in bullish territory and record highs are within shouting distance. Even after this morning’s opening, which saw some selling, traders should look at these results as evidence of profit-taking and little else. Technically, the DAX Index, like many other global equity indices, remains bullish. While some speculators may doubt the validity of the seemingly constant momentum higher in stock indices, the proof, as they say, is in the numbers, and sellers of the German index are no doubt a nervous bunch. The DAX Index traded near a high of 15568.000 on the 25th of May.

Yes, after attaining this record high, the DAX Index did reverse lower and tested a value of 15348.00 only one day later. However, taking into consideration the size of the moves within the DAX Index, the brief downward momentum needs to be looked at with the perspective that some speculative financial institutions may have merely been cashing out of winning positions. Global equities remain within a state of jubilant buying, perhaps it can be called too exuberant, but until proven otherwise, the trend remains attractive.

Technical traders who choose to pursue bullish momentum are likely making the correct choice from a speculative viewpoint. The question many of them are pondering is, where it will be most efficient to try and get into the market. Buying on slight reversals lower is an obvious wise choice, but it may prove to be incorrect. Because within the midst of the bullish behavior being expressed in the DAX Index, there is a chance the market could move away from a trader with upwards momentum, and not allow for the possibility to buy at perceived support levels.

Traders need to be patient particularly if they are conservative. However, the resistance levels of 15500.00 which are very close to actual market values as of this writing, may prove to be a key inflection point and, if prices are sustained above this level, it could set off another round of buying momentum. Therefore, a speculator may be making a correct decision to buy into the market slightly above this level with a limit order while hoping to capture additional momentum they believe will be demonstrated.

Traders need to also remember that today is a holiday in the US, which means trading in Europe could be a bit choppy short term. However, it doesn’t mean they should wait for the return of American investors. Buying into the DAX Index today, using cautious stop losses, and looking for upside momentum in the near term remains a rather logical speculative wager.

DAX Index Short-Term Outlook:

Current Resistance: 15500.000

Current Support: 15437.000

High Target: 15600.000

Low Target: 15395.000

DAX Index

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