The DAX in Germany has been negative during the session on Tuesday, as the yields in Germany and elsewhere continue to be elevated.
DAX
The DAX in Germany found itself on the back foot during most of the trading session on Tuesday as we find the 23,000-euro level an area of extreme interest and I do think that traders will continue to pay close attention to it.
With that being the case, I believe you've got a situation where traders are trying to sort out where the war in the Middle East goes next and of course with the Americans putting a deadline on overnight, it means that it's possible we may see increased damage done to the energy infrastructure in Iran.
Geopolitical Risks and Energy Infrastructure
If that ends up being the case, then it makes quite a bit of sense that Germany could really start to hurt. This after all means that the economy slows down and it makes sense that the traders are going to continue to look at the DAX with a little bit of skepticism because, quite frankly, if there's no energy for the country, then economic growth would be very difficult.
Ultimately, I think this is a situation where there are probably buyers of dips out here, but it is going to be a very difficult market that I think a lot of traders will struggle with. A lot of patience will be needed with a small position.
But if we could turn around and break above the 50-day EMA, it's likely that we could see the market really start to jump from there. A breakdown below the 22,750 level could open up the possibility of a drop all the way back down to the 22,000 level where support had been found a couple of weeks ago. Ultimately, I do think we're in the middle of trying to correct and perhaps even find a longer-term bottom, but things are going to be very noisy.