- The Dax fell initially during the trading session on Thursday.
- As you can see, the €18,000 level seemed to be offering significant support.
- We are currently dancing around the 23.6% Fibonacci retracement level from the last leg higher, and at this point in time, if we do turn around and rally, it suggests that there is a lot of momentum underneath.
If we can break above the high of the day on Thursday, then I think it opens up a move towards the €18,500 level. That being said, keep in mind that the ECB meets and that of course will cause a lot of noise. So, if we do break down from here, I think it just offers a better buying opportunity.
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The Overall Momentum
With that being said, I think the trend won't be changing anytime soon, and it's probably worth noting that the 50 day EMA is currently hanging around the 38.2% Fibonacci retracement level, sitting right around the €17,800 level. All things being equal, Germany will be the first place that people run to when it comes to the stock market in the European Union, and I think a lot of people are looking for cheap money coming out of the ECB as they almost certainly will have to loosen their monetary policy and the fact that Germany is already in a recession only puts more pressure on that potential move.
With that being said, I do think eventually we go looking to test the highs again, which are close to the €18,600 region. The market is one that is strong in general, and this pullback is a good thing for the idea of keeping the trend to the upside. The market isn’t one that I am willing to short, as there are too many expectations of buying going forward. This market continues to wait for the ECB to flood the markets with liquidity in the future, as Germany will be the first beneficiary of this potential action.
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