DAX Set to Continue to Appreciate
Major European indices opened higher on Wednesday, with the pan-European STOXX 600 index edging higher after reaching a one-month high yesterday on the Fed’s new bond-purchasing plan announcement. The GER_30 (DAX) presents an interesting buying opportunity today with markets having short to medium term potential to the upside.
Having bought at 12,350 we added our stop loss to 12,150 with potential towards the 12,700 level, if not even higher. The stock markets seem to be pushing higher as support from central banks weighs on the positive market sentiment – for now, at least.
We may see the markets reversing gains the following week, as a Beijing has cancelled 60% of flights and imposed a fresh lockdown on schools after a second wave of COVID-19 cases. While Central Bank stimulus seems to have been effective in supporting the markets, it’s important to remember that this is an artificial bull-run and as such, it cannot last.