The German DAX fell a little over half of a percent on Tuesday, as the 10-year yield in Germany is still above the crucial 3% level.
DAX
The German DAX fell a little over 0.5% during the trading session on Tuesday as we are now testing the 50-day EMA yet again. This is also where the 200-day EMA sits so it makes a certain amount of sense that traders are going to target this area for potential support.
That is also backed up by the idea that German interest rates in the 10-year rose to 3.073% late in the day and that is going to cause a little bit of pressure on German markets. Furthermore, we have to ask questions about energy and that has a major outsized effect on Germany due to the fact that they import almost all of their energy and of course it has a large industrial base that is very heavily dependent on imports of different types of energy.
Resistance and Long-Term Outlook
With that being said, if the market were to rally from here the 24,400 level is an area that I think is a bit of a ceiling, at least that's been the case over the last week or so. And even if we get above there, I don't think we get much higher than 24,750 without a major catalyst.
To the downside, if we were to break down below both the 50-day EMA and the 200-day EMA we could drop to the 23,500 level, possibly even the 23,000 level. Ultimately, this is a market that I think continues to see a lot of choppiness and volatility but given enough time this is a market that I do think rises.
I do like the DAX longer term with the fiscal spending of the German government coming into focus but as long as there is so much volatility in the Middle East it will be difficult to have a longer-term sustained rally.