The Dax index formed a rising wedge pattern that completed last Friday, and now the price broke below the lower edge. At this point, bears have a trade against the highs as the price action following a rising wedge formation often retraces the entire pattern.
The stock market indices around the world continue their bullish run as the dollar remains weak. Last Friday’s NFP report missed the forecast by a mile, yet the stock market indices, such as the Dow Jones and the S&P500 made new all-time highs. The futures remained bid, and so at the opening on Monday, the European indices were bid as well. The Spanish index, for instance, opened at sixteen months high.
But the strong euro weighs on stocks. The common currency keeps gaining against its peers, and that is the main difference between the European indices and the American ones.
Moving forward, no important economic data is due out of Europe this week. Therefore, the price action on the Dax will depend on the euro’s strength and on the US stock market indices.
Dax Index Technical Analysis
Bears may want to remain on the short side with a stop at the highs and a take profit below 15,000, as the market often retraces the entire wedge pattern.