The DAX rocketed higher over the last week being one of the first markets to reverse the trend that we had been seeing in the various markets over the last couple of weeks of last year. Those 2 weeks had been characterised by weakness in the stock markets and the weakness in the dollar and both of these had been achieved on low volume. While the weakness in the dollar continues to exist, the stock markets have been able to bounce back.

DAX Rockets Higher

The last week was one of truncated trading after the long weekend and it was expected that the traders would slowly begin to come back to their desks after the long holidays. This would lead to increase in volume and liquidity and thats what we saw last week. After seemingly being under the hold of the bears as it traded below the 12900 region to begin the week, the index slowly recovered during the first half of the week as the traders used the low indices value as an opportunity to buy cheap and this helped the index to recover. What started as a trickle turned into a flood in due course of time.

The incoming data from Germany was also strong during the course of the week and this along with the fact that the US stock indices moved towards all time highs once again, helped to buoy the DAX during this period as we saw it recover from below 12900 to close the week above 13300 and this promises more gains in the coming week.

Looking ahead to the coming week, we have some minor data from Germany in the form of manufacturing production but we doubt whether those would be enough to have an impact on the index. We expect the risk sentiment to continue to improve which should help the DAX move higher and challenge the psychological resistance region around 13500 during the course of the week.

This article was originally posted on FX Empire

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