The global markets were all over the place during the trading session on Thursday, and as the United States release CPI numbers running twice as hot as anticipated, it looked like things were going to get out of hand. However, as traders are focusing on the latest rumor coming out of the United Kingdom, they have been treated to whispers that the UK budget may be reconfigured to make market participants happy.
As a result, the DAX has turned around significantly during the trading session to slam into the €12,500 level. This is a ridiculous move, but at this point I think it’s a market that was just looking for a reason to rally. At this level, there should be plenty of resistance extending all the way to the €12,500 level, where the line on the chart is, followed by the 50-Day EMA which is closer to the €12,750 level, also an area where we had seen resistance previously.
Waiting for a Pushback
- If we can break through all that, then we can start to talk about the DAX truly taken off to the outside. I suspect that we are trying to carve out some type of trading range, and that the volatility will probably continue to be a bit much to stomach.
- You need to keep your position size reasonable in markets like this, because you can get chopped up. The last thing you need to see at this point is going to be some type of erratic move, because the markets are extraordinarily fragile to begin with.
- Often, the volatility rising means that the market will eventually find itself going lower due to the fact that it will scare a lot of traders out of the market.
The size of the candlestick is rather impressive, but at the end of the day, we are still in the same range that we have been in for a while. I do believe that it is probably only a matter of time before we see some pushback, so the Friday close will be very important to pay attention to, as it gives us a bit of a “heads up” as to how people feel about holding this index. More likely than not, it’s going to be about going back and forth and keeping your money management skills on point.
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