- The DAX had initially fallen during the trading session on Tuesday, but it does look like the 50-day EMA is trying to hold things together.
- The 50-day EMA sits just above the 18,250 euro level, an area that has been important more than once.
- So, I think it all ties together quite nicely for a potential move to the upside.
Caution Continues to Be the Way
At this point, I think you've got a scenario where traders will continue to be very cautious, but they will recognize the fact that the market is likely to be very erratic, but positive over the longer term. The ECB is likely to cut rates either this week or maybe at the next meeting. And I think a lot of traders out there are trying to bet on that. If they do not cut rates, then it's possible that the volatility could be extreme this week, but all things being equal, the uptrend is still very much intact.
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Even if we were to break down below the 18,250 euro level, the 18,000 level would be a major support level as well. In general, this is a market that I think continues to see a lot of buy on the dip attitude. I do think that the prize is to be found closer to the 19,000 euro level.
Breaking above there, we could see a move all the way to the 20,000 euro level. Keep in mind that the DAX represents Germany, which of course is the biggest economy in the European Union. So, this will be the first place that people put money to work when trying to invest in the continent. I like the overall trend. I just recognize that it might be noisy for the next couple of sessions.
Because of this, I think you are probably better off waiting to see whether or not we can get momentum to the upside that you can follow. Shorting this market is all but impossible, at least not until something drastically changes. It looks as if the DAX will continue to be positive, but with the volatility that we can expect, you may be better off just waiting.
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