- The German index has dropped a bit during the trading session on Thursday as the €24,600 level continues to offer significant resistance.
- All things being equal, the market is likely to continue to see a lot of choppiness in this area, because global indices around the world continue to struggle to find momentum.
- At this point, we are in the dead of summer, and this means that a lot of traders are probably away at the moment.
European Central Bank
The biggest driver of the day would have been the European Central Bank interest rate decision, which was no change at all. That being said, there were also statements and suggested that the central bank was essentially “on hold at the moment”, and this has people that were looking for cheap money coming out of Brussels reeling. At this point though, I don’t think that really matters in at the end of the day the German index is going to lead the way for the rest of the European Union.
When you look at the longer-term chart, it has been in an uptrend for some time, and therefore it does make a certain amount of sense that we continue to see buyers underneath. I’m looking at this as a potential buying opportunity, especially with the 50 Day EMA sitting at the €23,783 level and rising. The €24,000 level has offered support a couple of times recently anyway, so this does make a certain amount of sense to be backed up by the 50 Day EMA if we do in fact drop. If we were to break down below there, then the next massive support level that I see is at the €23,000 level.
On the other hand, we break above the €24,600 level, it’s very likely that the market will continue to go much higher, and quite frankly I think that is exactly what happens given enough time. Based on the so-called “measured move” of the consolidation that we have just spent the last couple of months in, you could be looking at a move to the €26,200 level.
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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.