DAX Forecast: Continues to Struggle with the Same Area yet Again

• The DAX has been very quiet during trading on Wednesday, as we are trying to figure out what to do with risk appetite.
• It’s worth noting that the €14,500 region has been very resistive more than once, so it’s not a huge surprise to see that the market spiked above there during the day on Tuesday, only to give up those gains and form a massive shooting star.
• The question now is whether we can break above the top of a candlestick, or if this is a sign that we are starting to break down again.

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As for myself, I look at this through the prism of a bit of a binary setup. If we can break above the top of that shooting star, I believe it’s a very bullish site and could send this market higher, initially testing the €14,800 level, and then going to look towards the €15,000 level.

The Market is About to Make a Bigger Move

Underneath, you can see that I have a yellow line right around the €14,200 level, which I think is a significant short-term support. If we break down below that level, then we could very well test the 50-Day EMA, which is sitting just below the €14,000 level, and then possibly even the 200-Day EMA which is sitting right around the €13,700 level. Regardless, I think this is a market that is about to make a bigger move, as we have been consolidating in the same range for a while. Once we get some type of catalyst, perhaps the forward projection from the Federal Reserve at the end of the day on Wednesday and the ECB meeting on Thursday, then we can make a little bit bigger move.

If we break out of the range that we have been in, it suggests that we could see about a €500 move, but I anticipate it will probably be a bigger deal than that over the longer term. Keep in mind that once this week is over, we start to look more toward the holidays, and a lot less toward trading. This drives down liquidity, although at the end of the year you can get some fund managers trying to pad the books with all the right assets. Either way, buckle up, we are about to make a move - at least in the short term.

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