Dax index is on a tear higher as the equity markets around the world benefit from the reflation theme. While the economic data out of Europe disappointed this week, the Dax follows the U.S. stock market closely and has the potential of continuing its bull run until the 15,000 level and maybe even more.
The PMI Services this week showed a grim picture of the European services sector. The contraction, in some cases even below 40, is so severe that it will make it difficult for the Euro area to grow in the near future. However, we may say that it was priced in as most European economies are in lockdown.
Yesterday’s inflation data revealed that the flash estimate CPI continues to drop, as the EURUSD exchange rate puts pressure on inflation. Should the Euro come down from the highs, the Dax index will benefit from a lower currency.
Dax Index Technical Analysis
The technical picture shows an index that formed an inversed head and shoulders pattern during a bullish run. Whenever this happens, the pattern acts as a continuation and not as a reversal pattern. Its measured move, equal to the distance from the neckline to the head projected from the neckline, points close to 15,000.
To trade it, bulls may want to go long with a stop at 13,500.
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Dax Index Price Forecast
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