The DAX Index has fallen over 1% during the trading session on Monday, as we are pulling back from a rather significant resistance barrier in the form of €14,500. We may be a little extended at this point, and it’s more likely than not a market that’s going to have to deal with some noise going forward. Keep in mind that the markets will continue to look at the entire global situation with a bit of trepidation, as the exports coming out of Germany will almost certainly be shrinking. That’s going to be the case, then obviously that is bad for the DAX, which is full of major exporters.
The €14,250 level is an area that had previously been supported, so if we were to break down below there think we probably slice through the €14,000 level and then go looking to the 200-Day EMA. The 50-Day EMA is sitting just below the €13,600 level and is trying to turn around and break above the 200-Day EMA, which is a technical indicator known as the “Golden Cross”, which is when the momentum is starting to pick up to the upside. I don’t necessarily think much about that, but longer term it may play out.
Fundamental Factors
- Germany has to deal with a whole host of issues, not the least of which is going to be whether or not they have enough energy.
- One of the things that I keep hearing about and laughing at is the fact that politicians say that the “reserves are full” when it comes to natural gas.
- Here’s a hint: natural gas reserves make up about 20% of the natural gas needed in Germany over the course of winter.
If we do break out to the upside, the €14,800 level could end up offering a little bit of a resistance barrier, but if we were to break above there then we have the possibility of taking out the €15,000 level. Ultimately this situation is one that suggests that we could be trying to break out, but the action on Monday certainly does nothing to help confidence, which of course is a major component when it comes to trading. Pay attention to other indices around the world, as they could have a bit of a “knock on effect” on the DAX.
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