DAX 10,000 or bust?

The dip buying I advised in the FTSE worked out well so far.

This is where the markets get very unpredictable. I guess with Draghi’s comment regarding a rate move has only fuelled the fire for investors to not only remain long the indices but also start to buy to hit more record highs.

There is only one way I deal with new highs and that is to take it back to the higher time frames and use the past to predict the future with Fibonacci expansions. The Monthly Fibs (yellow) so long term view suggest 10884.08 as a target above that, very long term 12939.59. A little more realistic in the medium term then the weekly (blue) expansions make more sense to me.

 

The key levels as I have said in previous analysis will be 10000 (red) psychological levels are always the 1^st target when no technical levels are available. From here 10052.33 then 10510.66 will be a good point of resistance and should see some seller brought into the market. We have already hit 9760.67 which is the weekly 61.8% Fib expansion point, so a close above this would suggest the markets will test certainly the weekly levels I have mentioned above in the short/medium term.

 

If we fail to hold above 9580.11 then the market could be due a well-deserved correction. With Putin’s comment on stopping gas supplies finally making the indices stand up and take notice, the fundamentals and the truth rather than Draghi and what if’s could finally see a major correction in the DAX to 8908.80

 

Steve Ruffley Chief market strategist Intertrader.com