- The German DAX has rallied just a bit during the early hours on Thursday as it looks like we are trying to recover a bit.
- The 18,000 euros level is an area that obviously will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, but it's also an area where we have seen some noise previously.
- The market at this point in time continues to see the 50 day EMA underneath as potential support.
- In this type of environment, I think we continue to see a lot of consolidation as we try to sort out which direction we are going in the longer term.
Trend is Still Positive
The DAX is bullish overall, but I think also this is a situation where if we can break the candlestick from the last couple of days then we could go looking to the 18,500 euro level. Underneath the 50-day EMA there is a lot of support that we've seen recently so I'm not interested in shorting this market anytime soon.
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That being said, the 17,500 level is an area that I think a lot of people will be paying attention to because if we were to give that up, then the uptrend could be threatened. Keep in mind the DAX is the gateway to Europe for most traders so they will look to it as a place to put money to work initially. In that sense, you can look at the DAX as a harbinger of what happens on the rest of the continent such as trading in the MIB in Italy or the AMX in Amsterdam etc. At this point it looks like we're trying to beat back some of this negativity, but I think we've got some choppy and volatile days ahead of us.
When you get this type of choppy volatility, you are better off using small positions, but given enough time I do think that we continue to see an attempt to rally. If we don’t rally in this market, and start to break down, then the real trade would be to short some of the smaller European indices.
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