- The DAX has shot straight up in the air during the day on Friday, as you can see, and it looks like we are ready to go much higher.
- Ultimately, I think this is a scenario where traders will be looking into trying to stay long, but short-term pullbacks are certainly possible.
- Short-term pullbacks, I think, will offer value in an index that seems hell-bent on going higher just as its American counterparts are.
- With that being said, I like DAX as it appears that the European Union is somewhat stronger than the US at the moment, as we have seen a batch of negative economic announcements recently.
Grinding Higher is Likely
So, I do think that it will continue to grind to the upside. The 50 day EMA is currently near the 23,400 level and rising. And then underneath there, we have the 23,000 level that also offers support as it has shown itself to do just about two weeks ago. Ultimately, I think this is a market that will eventually find a reason to get to the 25,000 euro level, and this is a great example of when momentum finally takes over.
Every time the DAX pulls back, there will be value hunters trying to get involved and jump on this massive rally to the upside. As far as selling is concerned in the market, it’s really not until we break down below the 23,000 euros level on a weekly close that I’d be concerned about the overall trend. That doesn’t mean that we shoot straight up in the air, but what it does mean is you’re looking to one direction only. There’s no sign whatsoever of an imminent turnaround, and therefore you would have to assume that the overall attitude of the markets are concerned.
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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.
