- During the early hours on Monday, we have seen the text get absolutely crushed, slamming to the downside for a loss of well over €500.
- At this point in time, the question is whether or not we can find some type of bounce, or even just a little bit of stability.
- Despite the fact that we have had such an ugly day on Monday, the trend is still positive, and therefore I’m not quite ready to start shorting the DAX quite yet.
- However, I’m the first to admit that it’s likely that we will see more downward pressure.
Technical Analysis
The technical analysis for the text is obviously bullish still, but we need to pay close attention to the €22,000 level, as it is a major support level just waiting to happen, and of course we have the 50 Day EMA race toward it. I think this is where the real showdown is, and if we plunged below that level, then we could see a lot of negativity. Ultimately, this is a market that has been very bullish for quite some time, but the narrative of “risk on” in Europe could be coming to an abrupt end, as yields in Europe start to erode the desire to own equities.
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On the upside, we have the €23,000 level, which could of course be significant resistance still, followed by the €23,500 level. Anything above there then kicks off the next leg higher, but at this point I think it’s a little early to be looking for that. The most prudent way to trade this market is to simply observe what it does have the next couple of days and try to sort out whether or not we get a tradable signal. What I need to see as a bit of stability first, and then a little bit of a bounce in order to get involved to the upside yet again.
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