Last week was very successful for German bulls. During Thursday’s absence of US citizens they took initiative and managed to close bearish gap set on August 12th. German index is right now in quite comfortable position because next serious resistance is at 11,650 pts, and then 11,750 and 11,880 pts. If there will be rebound 11,000 pts should be strong support right now because there is actually bullish trend line.
According to wave theory there are two possibilities right now:
- DAX is in large wave B, it is correcting last decreases and in wave C there will be new yearly low (letters on the weekly chart)
- Correction is ended already and DAX is in new wave 1, after which we should see correctional wave 2 which should end above 10,000 pts level (numbers on the weekly chart).
MDAX reached to resistance created by highs from August. On Thursday there was a try of breaking it and index was just 100 pts from historical high. However there was a rebound and probability of new high in this week is very big.
The most important data will be published on Thursday and Friday. On Thursday 3rd there is meeting of ECB, markets are expecting lowering rates and expanding QE program. Good data can be a fuel for German bulls. On Friday we will know American payrolls. Last month’s data was very optimistic and much better than expected. If the next one will be also good, FED have to raise interest rates for the first time since 2006. In long term it will be bad for stocks, but in short term it can even help bulls.
