- The German DAX has been all over the place during the trading session on Friday as we continue to dance around the crucial €18,000 level.
- This is an area that previously has been important, so the fact that we continue to consolidate in this area is not a huge surprise.
- Underneath, we also have the 50-Day EMA, and that of course has a major influence on technical traders and how they behave.
Germany is currently in a recession, although it is starting to show signs of breaking out of them. Because of this, it’ll be interesting to see whether or not the market continues to show that in its price action, or it’s possible that we just simply see a lot of noise. If we can break above the €18,350 level, then it’s possible that the market could go looking to the €18,600 level, where we pulled back from previously.
Germany is a gateway to Europe
Remember the Germany is the gateway to Europe, as the DAX is the biggest index in that region, therefore it makes sense that money goes flowing into the text quicker than anywhere else. Even if you are trading something else in the European Union, you always need to keep an eye on the text to see where money is flowing, be it into or out of the EU.
If we were to break down below the 50-Day EMA, then it’s possible that we could open up a move down to the €17,500 level, which is where we have seen a lot of buying pressure previously. Ultimately, at the end of the day we see this as a situation where we are simply taken a bit of a breather in the longer term uptrend, despite the fact that we had pulled back rather significantly a couple of weeks ago. In general, I think this continues to be a market that should continue to go higher, and perhaps go looking to the €20,000 level over the long term. That being said, it doesn’t mean that the DAX is going to have an easy way of a, nor doesn’t necessarily mean that momentum is going to enter the market quickly.
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