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DAX Forecast: Index Recovers at Crucial 50-Day EMA

As things stand right now, it still looks overall positive over here.

The DAX Index rallied rather significantly during the trading session on Friday, using the 50-day EMA as a bit of a launchpad. That being said, the market looks as if it is going to continue to see a significant amount of noise just above, as we have seen the 15,758 level offer massive resistance over the last couple of weeks. The question now is whether or not we can break above there for a bigger move?

When you look at the chart, we are still very much in an uptrend, so you should still be looking towards bundling opportunities. Short-term pullbacks should continue to find support near the 50-day EMA, but also the uptrend line that I have marked on the chart. At this point, the market is going to either continue to respect that uptrend line, or perhaps go sideways. If we do go sideways, it becomes very possible that we will continue to go sideways overall and simply “kill time.” A simple trend line break by itself does not necessarily mean that we are going to break down, because sometimes the market simply needs to take a bit of a breather.

It is through that prism that I have no interest in shorting the DAX until we break down below the 15,000 level, because that is a large, round, psychologically significant figure that should attract quite a bit of attention. It should also be noted that the 200-day EMA is at 14,400 and rising. If we break down below that, then I think the DAX will fall apart rather significantly. That could open up further selling across the continent, so I would certainly be paying attention to other indices at the same time.

To the upside, I believe that the 16,000 level being broken allows a significant move towards the 16,500 level and a continuation of the overall trend. Furthermore, you could even make an argument for a bit of a bullish channel that could extrapolate to the top of it. Looking at the size of the candlestick during the trading session on Friday, it suggests that wiping out all of those losses on Thursday could be a good sign for the strength of this market overall. As things stand right now, it still looks overall positive over here.

DAX Index

Christopher Lewis
About Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.


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