Speaking of the Euro, you should also pay close attention to the news conference from the European Central Bank, after what should be a 75 basis point rate hike on Thursday.
- The DAX rallied rather significantly during the trading session on Wednesday to show signs of life.
- In fact, it looks as if the market is ready to go looking to the €13,000 level, perhaps even breaking above there. When you look at the longer-term chart and seems as if we are trying to form a double bottom”, which of course is a bullish sign.
- There’s a lot of noise in this general vicinity though, so you cannot take that signal quite yet.
It’s obvious that the €12,500 level is offering a certain amount of support, so pay close attention to that level. If we were to break down through it, that could open up fresh selling, perhaps sending this market down to the €12,000 level. Keep in mind that risk appetite is extraordinarily poor right now, but it does make a certain amount of sense that the DAX might have a little bit of a reprieve in the short term, as we have seen the same thing in other risk appetite-related assets such as crypto, gold, and even the Euro.
Waiting for the ECB’s Decision
Speaking of the Euro, you should also pay close attention to the news conference from the European Central Bank, after what should be a 75 basis point rate hike on Thursday. If it is lower than anticipated, that will probably be good for the DAX, as the Euro will more likely than not drift lower. However, a lot of what we see will come down to what people interpret from the press conference. These days are very typically volatile, so therefore you need to be aware of the fact that the DAX may be very noisy and choppy, to say the least.
The size of the candlestick is somewhat impressive, and it is worth noting that we have broken above the top of the inverted hammer from the previous session, which is almost always a very bullish sign. With that being the case, I think we get a situation where we have a little further to go before the seller’s return. The 50-Day EMA is also an area that I would pay close attention to, which sits near the €13,250 level. The market is still very much in a downtrend, but a lot of what happens next will come down to that press conference tomorrow.