- The German index gapped to the upside during the trading session on Monday, as it looks like we are threatening the €24,500 level, an area that’s been resistance multiple times previously. All things being equal, this is an index that I do anticipate will continue to go higher over the longer term, but I also recognize that there are some questions about risk appetite at the moment that will continue to be a major issue.
Technical Analysis
A short-term pullback is likely to continue to be thought of as a buying opportunity in a market that’s been extraordinarily bullish over the long term, but over the last couple months has been working off a certain amount of excess froth. The market has been bouncing around between the €23,000 level at the bottom and the €24,500 level top. We have attempted to break out above the €24,500 level, and now it looks like we could even try to go to the €25,000 level given enough time.
The 50 Day EMA currently sits at the €23,983 level and is rising. This is an indicator that a lot of traders will be paying close attention to as it has offered both support and resistance, and I think in the short-term code offer enough support in order to keep the market somewhat bullish, and as long as we can say above the 50 Day EMA, then it’s likely that we will eventually break out to the upside, especially as Germany ends up attracting most of the attention in the European Union, and as long as people are willing to invest in the European Union, that means Germany will continue to attract inflows.
If we break down below the 50 Day EMA, then I will be looking at a €23,000 support level that keeps this market going bullish. As long as we stay above there, there’s actually no situation in which I’m starting to short the DAX anytime soon.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
