- The DAX rallied significantly during the trading session on Tuesday, reaching the €14,250 level.
- The market has reached this previous support level, which should now have a significant amount of “market memory” attached to it, which is exactly what I think because the market is to pull back just a bit.
- In fact, the resistance area just above there could open the possibility of a move to the €14,500 level.
It might be worth noting that the 50-Day EMA has offered support just below, and I think that extends down to the 200-Day EMA, which is a typical support region. Ultimately, a short-term pullback should continue to see buyers in that area get long again. However, if we were to break down below the 200-Day EMA, then it’s possible that the DAX could drop down to the €13,000 level, possibly even down to the €12,500 level which had previously been so important.
Pay Attention to the €15,000 Level
On the upside, if we were to break above the highs that we made just a couple of weeks ago, that opens the possibility of the German index reaching all the way to the €15,000 level. I don’t expect that to be the case, but it’s worth noting that it’s a possibility. A lot of this will come down to the situation in Europe, as Germany is a major exporter to the rest of the EU. Right now, things don’t necessarily look very great, and that could cause some issues. However, there may be traders out there looking for the European Central Bank to jump in and loosen everything, so that might be part of what we have seen in this market. After all, traders have been taught to pay close attention to central banks more than anything else over the last 14 years, due to altering easy monetary policy around the world.
The real question now is where we go once all the traders come back. By the end of the week, we should have an idea as to the directionality of this market, so I’m not necessarily in a huge rush to put a position on, but I do recognize that the previously mentioned level should be paid close attention to, as it should open the possibility of momentum in one direction or the other.
Ready to trade our DAX analysis? Here are the best CFD brokers to choose from.