DAX Forecast: Continues to Roll Over

In the short term, you are more likely than not looking at a “fade the rally” type of market, as there has been so much negative news out there, and it looks very likely to continue to be that way. 

The DAX has fallen during the trading session again during the trading session on Thursday to show signs of weakness yet again, and now it looks as if we are breaking the back of the hammer from the Wednesday session. The DAX is going to have to deal with the German economy potentially imploding, as there are a lot of concerns when it comes to inflation, and of course energy in general. At this point, the market certainly is teetering on something rather ugly, and I think it’s probably only a matter of time before we returned to the €12,500 level.

If we were to break down below the €12,500 level, then it’s likely that the market unwinds all the way down to the €10,000 level based on longer-term charts. It might take some while to get there, but at the end of the day, it certainly looks as if there is enough negativity out there to continue to push this market.

Expect a “Fade the Rally” Type Market

  • On the upside, the 50-Day EMA comes into the picture and offers a significant amount of resistance near the €13,200 level.
  • If we were to break above there, then it’s possible we could go looking through the €13,600 level.
  • The €13,600 level is where we had seen a lot of selling pressure earlier this week, and I think that’s probably going to continue to be a bit of a “ceiling” in the market.
  • The 200-Day EMA is at the €14,000 level, and that’s where I define where the trend changes.

In the short term, you are more likely than not looking at a “fade the rally” type of market, as there has been so much negative news out there, and it looks very likely to continue to be that way. Stocks in general look very negative across the world, and it’s hard to imagine that in an economy that is going to possibly shut down manufacturing, the stock market is going to do any better there. With this, I do believe that we are more likely than not going to revisit the €12,500 level and have a huge fight in that general vicinity. Where we go next will determine the next several months if nothing else. At this point, I just don’t see the fundamental reason for bullish pressure sustaining itself.

DAX

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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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