- The German index tried to rally a bit during the trading session on Friday but hit the well-defined the ceiling of €24,500.
- At this point, I think the market continues to struggle with the overall idea of breaking out.
- If we could break above the €24,600 level, then I think it opens up the possibility of a move to the €25,000 level, something that I would expect to see sooner or later.
Regardless, this is a market that I have no interest in shorting, despite the fact that it certainly looks as if the sellers are trying to press the issue in the short term.
Technical Analysis
The technical analysis for this market is obviously bullish from a longer-term standpoint, but over the last couple of months we have seen a lot of consolidation, but we have seen a lot of consolidation mainly due to the fact that the market had shot straight up in the air after initially launching in April. The market needs to work off some of this excess froth, and I think that is the big story here. Ultimately, this is a market that continues to see a lot of questions asked of whether or not we can break out to the upside, but keep in mind that Germany is without a doubt the first place people start looking to when trying to get involved in the European Union.
If we do break down from here, I’d keep an eye on the 50 Day EMA, which is currently at the €23,715 level and rising. This of course is a dynamic support level that a lot of people will be paying close attention to, so I think we’ve got a situation where there should be plenty of buyers on dips in this environment. I have no interest in shorting the DAX, and I do believe that we should continue to remain positive over the longer term.
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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.