DAX Forecast: Continues to Build Pressure

• The German DAX was slightly positive during the trading session on Tuesday, as we continue to hover right around the €18,000 level.
• This is an area that I think a lot of people will be paying attention to, as it is not only a large, round, psychologically significant figure, but it’s also an area that has been stubbornly resistant as of late.
• That being said, the DAX certainly looks like it’s not shying away from the fight, and therefore it’s likely that we will continue to see people willing to step in and picked this market up.

By on the dips

This is a market that I think is the epitome of “by on the dips” with its attitude, and the 20-Day EMA sitting right around the €17,700 level is probably worth paying attention to as well. I have no interest in shorting this market, it is far too strong and it is likely that we will continue to see a lot of momentum chasing. Any dip at this point in time is going to be thought of as potential value, and quite frankly I just don’t see how the DAX starts to fall as a lot of people are waiting on the European Central Bank to start loosening monetary policy again. That will help the DAX, as Germany is the major economic engine for the European Union.

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When I look around the EU, most indices look very bullish, so I don’t expect the DAX to be any different than the CAC, MIB, etc. With this being the case, I think stocks are behaving the same around the world, as they are simply looking at the liquidity measures of central banks out there as a potential opportunity to take advantage of. With this, I remain bullish but I also recognize that the occasional pullback is just part of the overall situation that we will be dealing with. I have no interest in shorting this market, it is far too strong, just as most other indices around the world are. I remain bullish, but I also recognize that an overextended market like this can have the occasional nasty pullback that you need to be prepared for.

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