- The German index, the DAX, has initially shot higher during the early hours on Thursday, but gave up gains as the ECB decided to cut rates, and then proceeded to fumble through the press conference, essentially saying that they had no idea what they were doing.
- This obviously does not help market participation and suggests that perhaps even though they claim to be “data dependent”, with the meant to say is “we just don’t know.”
Technical Analysis
The DAX technical analysis suggests that we are going to continue to go higher, but I also recognize that it suggests that we are going to continue to see a lot of noisy behavior. Just below, we have the 50-Day exponential moving average sitting near the €18,350 level and rising. Underneath there, we have the €18,250 level which is a previous resistance level that has now all of the earmarks of being massive support.
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The DAX market looks as if it is forming some type of bullish flag, and therefore I think it looks like the market is going to continue to be noisy in trying to form some type of basing Forex chart pattern before we go higher after all. After all, it looks like stock traders continue to be very aggressive around the world, and I don’t expect Germany to be any different. In fact, it’s not until we break down below the €18,000 level that I would be concerned about the trend, and even then, I would have to pay close attention to the 200-Day EMA, which is closer to the €17,250 level.
Keep in mind that Germany is a heavily export latent economy, so a lot of this could come down to the value of the euro, and what it does. Currently, the euro is bouncing around between the 1.09 level and the 1.08 level against the US dollar, but even if it were to break a bit higher, it is still somewhat historically cheap and therefore I think a lot of people will start to look at the European indices through this prism.
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