The DAX initially fell during the trading session on Tuesday but found enough buyers underneath to keep the market somewhat afloat. Eventually, the market broke above the €13,000 level, which is yet another big figure overcome. This is an interesting candlestick, due to the fact that the previous candlestick was a bit of a hammer as well. This shows that over the last couple of days, buyers have jumped in to try to support the DAX every time they think there is a little bit of value. This is a good sign, as it appears that the buyers are trying to make a statement.
However, you should also keep in mind that there are a lot of problems in the European Union right now, and there’s a lot of hope out there for central banks coming in and saving everyone. Whether or not that happens is it completely to the question, and of course Germany does not operate in a vacuum. What I mean by this is that the economy is highly sensitive to exports, and the rest of the world is currently having a lot of issues. As long as that’s going to be the case, it does make a lot of sense that we would see that all these major exporters are still operating on pins and needles.
The 50-Day EMA sits just below the candlestick, so it does suggest that perhaps we are going to see a little bit of support. If we were to break down below there, then we could drop to the €12,500 level, and that would not be a huge price considering just how much negativity there is out there at the moment. The market will continue to be volatile to say the least, and with that it’s likely that we would have to be cautious with position sizing, but the DAX does look like it is attracting some inflow.
- It would take very little to spook the market again and send in plunging.
- If we were to break down below the €12,500 level, that almost certainly would open up a big move lower.
- In that scenario, we could be looking at a plunge down to the €12,000 level. On the other hand, if we do break higher, I suspect that it’s going to be more of a grind than anything else.
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