- The DAX has shown itself to be rather resilient during the trading session on Thursday as we initially pulled back just a bit during the training session, but buyers came back in to support the German index.
- The 50-Day EMA sits just below, and I think it is often a little bit of dynamic support. The dynamic support helps quite a bit, and as a result, it does make a certain amount of sense that the market will continue to look to the upside.
- It’s worth noting that the €15,600 level has been significant resistance previously, so I do think that it will take a certain amount of time for the market to break above there, but if we do break above there, then Frankfurt could really start to take off.
On the downside, if we were to break down below the 50-Day EMA, then it’s possible that we could go down to the 200-Day EMA which is closer to the €14,350 level but is also rising. That would be your next target, and it should be noted that Germany is outperforming all of the other European indices out there, so it does make sense that you need to pay close attention to this chart. After all, it could lead the rest of the European Union to either higher or lower.
Market Could Pop Rather Hard
Either way, I think you need to be very cautious with your position sizing at the moment because we are most certainly in an area that will cause a lot of back-and-forth noise. However, if we were to break above the recent resistance barrier, it’s possible that we could see more of a “beach ball being held underwater” effect. In other words, it could pop rather hard, dragging other indices in the European Union right along with it if you do happen to miss this one.
For example, you could trade the AMX, the MIB, or the IBEX, using the DAX as a leading indicator. The exact opposite is true as well, meaning that if Germany falls, the rest of these markets will probably get hammered as they are smaller and less liquid. Another chart to pay close attention to is the CAC Quarante in Paris, as it is also a major player in the EU that has a lot of external influence on other markets.
Ready to trade the DAX in Forex? We’ve made a list of the best CFD brokers worth trading with.