The German index rallied to kick things off on Tuesday, as we are looking to see whether or not the spending by the German government will continue to provide a helping hand.
DAX
The German index has rallied again during the trading session on Tuesday to peak above the 25,000-euro level, which is an area where we've seen a lot of action previously, and of course, there is a certain amount of psychology attached to a number like 25,000.
With that being the case, I think you have to look at this as a market that continues to move on the latest headlines coming out of the Middle East and, of course, risk appetite in general. Ultimately, the Dax is also moving due to the ZEW Economic Sentiment Index coming out at 10.5 instead of the forecasted -6.
That is a very good soft economic number for Germany and could continue to be attractive to traders. Short-term pullbacks do make a certain amount of sense, though, as the 25,000-euro level could end up being a bit of a barrier.
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The 50-day EMA currently sits just above the 24,500-euro level, and I think that's your floor. If the market were to stay above there, then I think you have an opportunity for further upward trajectory, but I also recognize that there's a lot of noise between here and 25,400 euros.
With this, if we can break that level, then it frees the German DAX to continue much higher. With the massive fiscal spending that the German government is expected to do during the year, that provides a little bit of a tailwind, but we also have a headwind in the form of concerns about energy supply, which seems to be moving.
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