- The German DAX initially did rallying during the trading session on Thursday, but pulled back a bit as it may be just a bit overstretched.
- Ultimately, this is a market that I still believe looks very bullish, and despite the fact that we couldn’t hang on to gain early on Thursday, the reality is that we are very much in an uptrend and there’s no reason to be fighting it.
ECB to the Rescue?
While the European Central Bank hasn’t explicitly said so, they have at least hinted that perhaps they may be open to the idea of loosening monetary policy later this year. As Germany is in a recession, that automatically puts a dent into roughly 1/3 of European GDP, and therefore the ECB will have to pay close attention to this. All things being equal, a short-term pullback is very likely, but I think that pullback would end up being a situation where a lot of people will be looking for momentum driven trading, as we have seen in New York, and for the same reason - liquidity. If the ECB starts to flood the market with liquidity, that will drive asset prices higher.
Top Forex Brokers
Underneath, I see plenty of support levels that are worth paying attention to. The first one would be the €18,000 level, followed closely by the €17,600 level. We also have the 50 day EMA underneath that would come into the picture, which is currently near the €17,400 level.
On the upside, I see the €18,250 level as a major resistance barrier, and if we can turn around and break above that, then it’s likely that we will continue to go much higher. In general, this is a market that I think will not only break through there, but perhaps go looking to the €19,000 level, with a longer-term target of €20,000 above, all things being equal. That being said, you also have to realize that the market is a little stretchy so the occasional pullback will of course be something that you can expect. This is something also that you can take advantage of if you are patient enough.
For additional & up-to-date info on brokers please see our Forex brokers list.