The German index continues to see a lot of noise at the moment, as European economies will continue to worry about energy. At this point, it will only increase the amount of volatility.
The German index has been noisy during the trading session on Thursday, but it does look like we are trying to do everything we can in order to turn things around and show signs of strength. The 23,000-euro level underneath offers plenty of support and I think it is an area that is the bottom of the overall consolidation area as we have been going back and forth for some time.
Ultimately if we do rally from here then I think it opens up the possibility of a move to the 200-day EMA which currently sits at the 24,100-euro level. I think as we try to find a bottom here it's likely that we are going to be very noisy because the bottoming pattern is very common to see that the markets bounce back around as we try to find a reason to get going to the upside.
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Market Support and Energy Volatility
On the other hand, though, if we were to break down below the 23,000-euro level that could be somewhat negative. All things being equal, I think the DAX is offering some value and certainly will jump if we get some type of deal to get energy to Europe now that the Straits of Hormuz continues to be a major issue.
All things being equal I do think longer term we rally but in the short term we are going to have a lot of volatility due to the energy issues and of course the fact that Germany and the rest of the European Union for that matter are so vulnerable to these energy disruptions overall.
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