- The German DAX gapped lower to kick off the trading session on Friday, clearing the 50 Day EMA as we have seen a lot of destruction to indices and stocks around the world, especially after the Americans released a horrible jobs report.
- Because of this, I think you have a situation where traders are looking at the global economy with a certain amount of fear, so we have seen most indices around the world print red candles for the session. Obviously, Germany would not be immune to this.
Technical Analysis
The technical analysis for the market at the moment is one of the somewhat sideways action, but I would also point out that the market had screamed to get to the highs recently, so therefore we may just simply need to go sideways for a while and work off some of the excess froth. If we do in fact see more sideways action, I would anticipate that there will be plenty of buyers near the €23,000 level to stabilize things. If we break down below the €23,000 level, then I think the market could very well drop to the 200 Day EMA, near the €22,136 level.
Ultimately, I do think that the DAX will continue to go higher, especially if we start to talk about the possibility the central banks will loosen monetary policy again. If they do not, that would be horrific for stocks, because quite frankly we are starting to see a lot of cracks in the wall when it comes to global economies and more concerning, the US economy, which of course drives the rest of the world. Germany itself has had some issues, and it is worth noting that the German economy will end up being a major issue for Europeans overall, as the rest of the continent just simply follows the Germans. Ultimately, I’m watching the €23,000 level very closely to see if we get some type of bounce.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.