DAX Forecast: German Index Builds Case for Higher Levels

Christopher Lewis

I have no interest in trying to short this market.

The German index initially pulled back during the trading session on Thursday to reach down towards the previous downtrend line yet again. This is an area that continues offer support, so it is not a huge surprise to see that we have bounced again. The 50 day EMA is sitting right around the same area as well and looks as if it is ready to continue trying to push the market higher.

The German index of course is very sensitive to the overall economic growth, as many of the German companies are major exporters of industrial goods used in large construction. Because of this, the market is likely to continue to see buyers as long as the reopening trade is still very much intact. If that is going to be the case, then Germany should do quite well. That being said, it does not necessarily mean that we go straight up in the air, but what it does suggest is that we will continue to have plenty of buyers on dips. Stock indices around the world are doing fairly well anyway, so the DAX would probably get a little bit of a “knock on effect” from those moves.

To the downside, it looks as if the 15,380 region attracts a lot of support, and therefore I think it is probably only a matter of time before buyers would come in and pick this market up in that area. If we break down below there, then the most obvious support level after that would be the 15,000 level, not only due to the psychology, but the structural behavior of the market in that overall vicinity.

When you look at this chart, you can see clearly that the DAX has broken a major downtrend line, and it certainly looks as if we are going to try to continue to go higher. The DAX has been consolidating over the last couple of days, and therefore it makes a certain amount of sense that we eventually go higher, as stabilization makes quite a bit of sense. The market will continue to be noisy, but it certainly looks as if it has quite a bit of support underneath and therefore it is only a matter of time before we take off to the upside. I have no interest in trying to short this market.

Dax

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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