Potential signal:
- I believe that the DAX goes higher.
- As a result, on a break above the candlestick for Monday at €23,290, I’m a buyer and I would have a stop loss at 23,000 underneath, with a target of 23,900 above.
During the trading session on Wednesday, we have initially seen the DAX pulled back just a bit, only to turn around and show signs of life again. By doing so, the market looks as if it is ready to continue to threaten the upside, and we are approaching an area that previously had been difficult to overcome. All things being equal, the candlestick from the Monday session should be watch very closely, as it could give us an idea as to when the selling pressure has been broken.
If we can break above the top of the candlestick, we then reach a fresh, new high, and that is likely to be a signal for more FOMO trading to enter the market. Between now and then, I would anticipate that the DAX should see buyers on dips, as Germany is exiting a recession, and we are definitely seen quite a bit of bullish pressure in European stock markets overall. After the recent spate of decent economic announcements in the European Union, that is not overly surprising, especially as all lot of people are now worried about a recession in the United States.
Uptrend Continues
At this point, I would anticipate that the uptrend should continue, because we are just now breaking out of a consolidation area that is just the markets way of digesting some of the massive gains that we saw. The €22,000 level continues to be an area that I think is very important, and therefore you need to watch that as to whether or not it will hold as a floor. If we break down below the €22,000 level, then things become a little bit more difficult to deal with, but it’s also worth noting that the 50 Day EMA is rapidly approaching that level. Anything below there could get ugly in very short order, but right now looks like we are light years away from seeing that happen, so I like the idea of owning the DAX, not shorting it.
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