Even if you are not trading the DAX, you need to know what is going on here, because it can give you a bit of a “heads up” when it comes to the CAC, IBEX, AMX, or many others in the European Union.
The DAX Index rallied on Monday but struggled to stay above the 50-day EMA by the time we closed. That is a bit interesting, considering that the market had been so bullish heading into it. The fact that we gave back the 50-day EMA is probably worth at least paying a little attention to, but at the end of the day the market is going to continue to move higher over the longer term from what I can see. That being said, we do need to stand up and pay attention if we break down below the €15,500 level.
To the upside, the €15,800 level has offered short-term resistance, but there is nothing major about that area other than it was a bit of a fulcrum for price seen previously. If we break above there, then the market is likely to go looking towards the €16,000 level. If we can break above there, then the market is free to continue more of a “buy-and-hold” type of attitude. That is the nature of the DAX most times, so pay close attention to the markets if we break above there. At that point, you can probably think more along the lines of investing.
Keep in mind that the DAX is a major index for Europe, so a lot of people will be paying close attention to what happens next. After all, the DAX tends to lead most of the other European indices, as it is considered to be the “blue-chip index” for the entire continent. It is typically the first place that money goes looking towards as people want to invest on the continent. Even if you are not trading the DAX, you need to know what is going on here, because it can give you a bit of a “heads up” when it comes to the CAC, IBEX, AMX, or many others in the European Union. It also gives us an idea as to how the overall risk appetite is behaving for the day. If we break down below that €15,500 level, then we could go all the way down to €15,000 before we get another opportunity to go long. A break above the €15,800 level would challenge the €16,000 level, followed by an even bigger move.