- The German index has fallen rather significantly during the trading session on Monday.
- As we continue to struggle overall, we are well below the 200-day EMA.
- At one point in time, we're down about 3.5%, but it looks like we are trying to recover.
The question of course is, would this be a dead cat bounce, or could it be a buying opportunity? I think at this point in time, you need to be very cautious about throwing money into the market because quite frankly, this could just be a quick dead cat bounce that gets sold into again.
Top Regulated Brokers
Germany is heading into a recession it seems and well, certainly the United States seems to be on the same path. That can't be good for equities in general. And if that's going to be the case, the DAX won't escape some of the selling pressure. It looks absolutely miserable at this point. And therefore, I think, although you could make an argument for shorting it here, the reality is it's very difficult to short an index.
No Chasing. Never.
Furthermore, you would be chasing that move. I'm going to be very neutral and on the sidelines for a minute and wait to see what happens. I need to see where the money flows first in order to put any real money to work. In general, this is a scenario where breaking through a major uptrend line, of course, kicks off a lot of algo trading, but it also is interesting that we did breach the 200-day EMA. Both of these are very bad looks indeed.
Overall, this is a market that will continue to see a lot of noise, but at this point in time, there is a situation where I believe that all indices will move in the same direction. Unfortunately for the DAX, it appears that there is very little in the way of help at this point. I believe the DAX will continue to see a lot of troubles, and therefore it is likely that we will see volatility regardless.
Ready to trade our daily forex forecast? We’ve shortlisted the best Forex brokers for CFD trading in the industry for you.