- The DAX has rallied significantly during the trading session on Friday, as a look like we are threatening a major breakout.
- We are basically at the €14,650 level, an area that should see significant resistance based on the previous action.
- It’s probably worth noting that when we did get to this area previously, we pulled back to reach the €14,000 range and the 50-Day EMA, right along with the 200-Day EMA.
Ultimately, this is a market that should see a lot of trouble just above, so a pullback would not necessarily be out of the question. If we get that pullback, then I think we probably go looking toward those moving averages again. If we break down below those moving averages, then it’s likely that we see the TEXT really take it on the chin. At that point, I would anticipate a return to the €13,000 region. That’s not necessarily going to be my base case scenario, but it is something that we need to pay close attention to.
Waiting for Monday’s Session
On the other hand, if we do continue to see the upward momentum in this market, then I think we could get moved to the €14,750 level, followed by the €15,000 level. A lot of this comes down to the idea that the ECB may come in and start to support the markets. After all, even though there’s a lot of inflation, the reality is that the European Union is going to continue to see inflation, but at the same time, we are seeing that inflation drop. If that’s going to be the case, then the theory of course is that profits for these huge multinational corporations should climb. Keep in mind that most of the bigger companies on the DAX are major exporters, so a lot of this is a play on the entirety of the European Union.
Ultimately, this is a situation where we have seen a lot of bullish pressure, so now we will have to see whether that can continue. After all, the last week or so has been extraordinarily strong, so now it’s a question of whether there are enough people willing to chase this market to make that move higher possible. All things being equal, Monday should be an interesting session, as it is at a major inflection point.
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