The German DAX Index rallied rather significantly on Wednesday, as rumors of potential warming to a cease-fire process. Russia did suggest that it was going to pull back some of its operations around Kyiv, but this could just be a tactic of to stall for time. The United States does not necessarily think that it is anything to get excited about, so one would have to assume that it is probably only a matter of time before disappointment sets in.
Yesterday, I had stated that it looks like we were going to pull back, and perhaps break down. However, we have broken above that 50-day EMA, something that I did say was possible. I also stated that if we were to break above there, the 200-day EMA could be the next target. This will only be exacerbated by signs of hope, but I would also point out that we did start to sell off a bit towards the end of the session. It is interesting that such rumors can move markets to where they can, but even if we were to get a secession of war in Ukraine, it does not change much as far as the economic outlook is concerned.
This is why I think the 200-day EMA is rather important because it is racing towards the €15,000 level, an area that previously had been supportive and is a large, round, psychologically significant figure. Because of this, it is very likely that we will continue to see a lot of noisy behavior, and now that we are between the 50-day EMA and the 200-day EMA, the market will more than likely see a bit of a squeeze. Because of this, I think you can count on a lot of noise and things will be choppy. I still believe that there are a lot of sellers above, and there are a lot of concerns in the European Union as far as the economy is concerned. Right now, about the only thing that the DAX has going for it is that the euro is so cheap. The candlestick does represent a breakout, but I see a lot of noise above. It looks as if there was plenty of profit-taking late in the day, so if there is any type of disappointment, we will more than likely break back below the 50-day EMA.