The German index initially fell on Wednesday, but found the €11,500 level to be supportive enough to turn the market back around. By the time we started to close down the markets in New York, we ended up forming a hammer. This of course is a very bullish sign, and it sits right at the previous gap. This candle suggests that were to try to go higher but I recognize that there’s a lot of noise between current levels in the €11,650 level. If we can break above there, I feel that the DAX will extend gains and go much higher. The €11,900 level would be targeted at that point.
Lead the rest of Europe higher
The DAX tends to lead the rest of the European indices higher, so this is a vital market to pay attention to. The support runs all the way down to the €11,400 level, and as long as we can stay above there I have no interest in shorting any of the CFD markets when it comes to European indices. That’s not to say it’s time to start buying quite yet, but if this market breaks out to the upside you will more than likely see quite a bit of bullish pressure in the CAC, MIB, FTSE 100, and the AMX. Because of this, I believe that it is only a matter of time before we go higher in all of these markets but this is the harbinger of them all.
If we break down below the €11,400 level, the market will more than likely reach down to the €11,200 level. Ultimately, this is a longer-term uptrend that I think it’s still very healthy, and the short-term pullback does very little to change my mind. Because of this, I believe that the DAX will be a nice longer-term investment, as we have much further to go in the long-term uptrend that I can see.
