- The German index went back and forth during the course of the trading session on Wednesday.
- As we initially tried to rally, only to turn around and slam into the €18,000 level.
- The €18,000 level continues to offer quite a bit of support, though, and we of course have seen a bit of a reaction as it has been so widely followed over the recent trading action.
We are currently dancing around the 23.6% Fibonacci retracement level from the last leg higher, but I think more importantly, we are paying close attention to the €18,000 level. If we can bring above the top of the candlestick for the Wednesday session, it would be a sign that we are ready to continue the overall uptrend. Perhaps reaching towards the recent highs near the €18,650 level. This is an area that will clearly show a lot of reaction if history tells us anything.
In general, I think Dax is a market that continues to see a lot of choppiness and noisy behavior. But after this type of move, there's only one direction you can be trading and that is to the long side. In general, I think this is a scenario where you are looking to buy dips, and the farther we drop, the more likely we are to see value hunters coming back in.
European Central Bank Continues to Be Important
Keep in mind that the ECB has a meeting and that will have a major influence on interest rate situation or comparison between the EU and everybody else. And that has a direct effect on the German index. Remember, Germany is already in a recession, so the idea of loose money coming down the road does make quite a bit of sense. Therefore, it looks like we continue to go higher in this market like so many of the world’s stock indices, as traders are trying to get ahead of inflation, and the destruction of fiat currencies around the world.
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