German DAX Index futures traded on Eurex dropped -1.1% during Wednesday's session to close the day at 7549. Due to recent poor performance, the DAX closed below its lower Bollinger band (two standard deviation bandwidth measured over the last 20 trading days) for the second day in a row. Furthermore, during Wednesday's decline, the DAX crossed below it 13-week low, hitting an intra-day low of 7511. How will the DAX respond in the coming weeks?
Q: How has the DAX performed in the past, omitting repeat occurrences within 10 trading days, when it crossed below its 13-week lowest low on its second successive close below its lower Bollinger band?
A: According to the 10 previous occurrences of this event, EventEdge indicates that the DAX has shown a somewhat bullish edge that peaks nine trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Wednesday, Jan. 16, 2008) is Wednesday, Jan. 30, 2008.
The DAX rallies in 100% of the cases (10 of 10) by an average of 2.1% relative to the close on the event date. The overall return of the 10 cases is 2.1%, which, based on the close on the event date (7549), provides a target price of 7707.5.
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HYPERLINK "http://www.markethistory.com/staff/detail.html?s=ronish" Ronish Patel is an analyst with MarketHistory.com.
