The DAX index held steady close to its highest level since February 18 of last year as focus shifted to the upcoming Fed and European Central Bank (ECB) decisions. The German blue-chip index has risen by over 27% from the lowest level in 2022, meaning that it is in a bull market. It joins other European indices that have been in a spectacular comeback in the past few months.
Fed and ECB decision
The German DAX index is braced for important events this week. First, the Fed will deliver its monetary policy decision on Wednesday of this week. In its first decision of the year, the bank is expected to hike by the 0.5% for the second straight month. With bond yields falling and with global stocks rising, the Fed will likely want to lower the enthusiasm by being extremely hawkish.
Second, the ECB will also conclude its meeting on Thursday this week. Unlike the Fed, the ECB is dealing with a substantially high rate of inflation. As such, the bank will hike by either 0.50% or 0.75% in this meeting. Other top central banks to watch this week will be the Norges Bank and Bank of England (BoE).
Finally, the DAX index will react to the upcoming earnings dump. Some of the top companies that will publish their results this week will be Apple, Caterpillar, Pulte Group, Exxon Mobil, General Motors, Marathon Petroleum, and Spotify among others. These companies will set the tone of what to expect this year.
DAX index forecast: daily chart
The chart shows that the DAX index has been in a strong bullish trend in the past few days. It recently managed to move above the important resistance level at 14,651, the highest point on December 13. By moving above this level, the index invalidated the double-top pattern that was forming and whose neckline was at 13,815.
The DAX index has also rallied to the 78.6% Fibonacci Retracement level and is being supported by the 50-day EMA. At the same time, the MACD has moved above the neutral point. It has also formed an inverted head and shoulders pattern. Therefore, the index will likely continue soaring as buyers target the key resistance level at 16,000. The stop-loss of this trade will be at 14,651. This view is in line with my previous DAX forecast.