- The DAX rallied a bit during the early hours on Wednesday as we are trying to reach towards the 18,650 euro level.
- Keep in mind, this is a market that has been sideways for a while, so it does make a certain amount of sense that we would continue to see a lot of back and forth.
- In other words, what I think what we are looking at is a scenario where a pullback offers a buying opportunity.
There is so much in the way of support underneath. After all, the 50-day EMA is sitting right in the middle of this consolidation area, and of course, we have the 18,150 euro level. The uptrend line, of course, meets there as well, so I think it all comes together for a buy-on-the-dip scenario. If we break above the 18,650 euro level, then it opens up the possibility of a move to the 19,900 euro level.
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In general, this is a scenario that I think you continue to look for value and it does make a certain amount of sense that the DAX would continue to see inflows because the trading public puts money in Germany first when it comes to the European Union. All of this being said, it's not until we break down below the 18,000 euro level before I get overly bearish. And even then, I think it would probably just be a garden variety 10% correction.
Summer Malaise?
All things being equal, it does look like we continue to go sideways through the summer and then eventually see more inflows once the autumn returns. In that timeframe, I expect to see a bigger move. And then I think you could see this market try to go towards the 20,000 euros level above, which of course will attract a lot of headlines. That being said it's very likely that we will continue to see a lot of overall bullish pressure, despite the fact that I suspect that the market will plunge once it does touch the €20,000 level. That will just be a blip on the radar going to much higher levels as things stand right now.
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