Dax breakout likely
The Dax Index (#DAX30) is trading in a decreasingly narrow range within the long-established uptrend and (on the hourly charts at least) is heading towards an inevitable breakout. Overall we feel that the German economic outlook has perhaps been a little too optimistic, and that the steep rally from 11265 would benefit from a correction. There is still much for Germany to fear from Brexit, and with the UK holding both local and European elections during May, the opportunity for voters to use this opportunity to punish the Government is unlikely to be passed up. Any hardening of the UK’s Brexit position is likely to have a negative effect on the German export businesses, particularly with regard to cars. We’d like to see the Dax lose at least 300 points or so into support at around the 12,000 level before having another stab at a rally.