The DAX Index rallied a bit during the trading session on Monday, breaking towards the 15,775 level. This is just shy of the all-time highs, and it certainly looks as if the DAX is going to have a little bit of follow-through and continue to go higher. With that in mind, I think 16,000 is on the verge of being tested, as the previous uptrend line had offered significant support. The 50-day EMA also offer support in that same general vicinity, so I think this is a nice technical bounce that a lot of people will be paying close attention to.
To the downside, the 50-day EMA and the uptrend line both offer a lot of support near the 15,400 level, and if we break down below there then we could go looking towards the 15,000 level. The 200-day EMA is reaching towards that general vicinity but has a way to go before we get there. With that being the case, it is only a matter of time before buyers would come in on dips, but it is worth noting that factory orders in Germany have started to fall, which is not a good look overall. While domestic factory orders were down ever so slightly, outside of Germany, orders were down well over 9% last month.
With that being the case, it is going to come down to liquidity measures and the idea of growth. So far, the market seems to be overlooking this, but it is something worth paying attention to in the sense that if it continues, it is very likely that the DAX will suffer as a result due to the fact that German factories are a main driver of this index.
The market is still very much in an uptrend though, and that is the most important thing to pay attention to. Ultimately, we have broken out of a very short-term consolidation, so it is very likely that we will continue to see buyers on dips, but you should also keep in mind that the market is going to be very noisy overall. With that in mind, I think this is a market that is going to be very steady, unlike many of the other indices that I follow. If the market does break down, I will be looking to short other indices on the continent, not necessarily this one. You tend to get more momentum shorting indices such as MIB, AMX, etc.
