- The DAX pulled back a bit initially during the trading session on Friday but then turned around to show signs of life again.
- It’s going to end up about 40 basis points to the good side on Friday, which of course is a good look.
- The market has struggled a bit to the upside to break out completely, so I think we are going to continue to chip away at this general vicinity.
When you look at this market, you can see that the €14,750 level continues to be of importance, and if we can break above there, then the TEXT can really take off. Keep in mind that a lot of people are paying close attention to central bank actions, and people believe that the recession may not be as steep as originally thought in some countries. Whether or not that is going to be the case in Germany is a completely different situation, and therefore the DAX may find itself fighting a lot of different crosswinds.
Position Sizing is Crucial
The 50-Day EMA is getting ready to break above the 200-Day EMA, forming the so-called “golden cross.” That’s a longer-term technically positive scheme as may be looking to get long again. Nonetheless, you can also make an argument that we are struggling at this resistance barrier to gain any traction, so I suspect that the next impulse of the candlestick will give us a bit of a “heads up” as to where we go next. If we break down, it’s likely that we could test the €14,000 level for support, and then possibly one of those moving averages I just mentioned. Nonetheless, this is a situation where we continue to see volatility, not only in this market but all markets so therefore position sizing will be crucial.
This is probably going to be true for the rest of the year, because 2 weeks from now liquidity will drop off a cliff, and therefore you going to need to be cautious with your position size as the swings at the end of the year can be quite violent on unexpected news. If not, much is happening at the end of the year, markets tend to do almost nothing. This is because of that you will need to get some type of signal rather soon.
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