The DAX has fallen a bit during the trading session on Friday as we continue to see a lot of noisy back-and-forth action. Nonetheless, I will be looking for a bigger move to the upside.
With that being the case, I think you have to look at this through the prism of whether or not we are forming some type of bullish flag. The market had recently shot straight up in the air, but the last couple of days, I believe, have been more or less about trying to gather and perhaps even show signs of working off some of that excess froth.
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Ultimately, this is a market that I believe will go much higher, but I also believe that this is a market that probably needs to spend a little bit more time working off that previous move. This could take some time, but overall, I anticipate that this market will find momentum eventually.
Looking for Support
If we do fall from here, I would look to the €25,000 level as an area of potential interest, and I would anticipate that the DAX probably finds some support there. Below there, then at the €24,500 level, an area that has been important previously, I would expect to see buyers as well.
As far as a target is concerned, at this point, the only thing you can do is take the measured move of the latest move higher, which could end up being the pole of a bullish flag, suggesting a €1,500 move.
That would put us somewhere in the neighborhood of 26,800, but we have a long way to go before that is confirmed. Keep in mind that there is a lot of fiscal spending in Germany coming up in the next few years, and that should provide some tailwinds for the DAX and major German corporations.
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