- The Dax initially rallied a bit during the trading session on Thursday but gave back gains like most other indices around the world.
- We came out like gangbusters at the beginning of the session and then just wilted away.
- At this point, the market is still going higher over the longer term.
Despite the fact that this particular session may not have been that great, the reality is that there are still plenty of buyers willing to jump into this market and take advantage of cheap contracts. With this being the case, I think the €18,600 level underneath continues to be support, and that support extends, down to the €18,250 level where the 50 day EMA currently resides.
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If we can take off to the upside, we may challenge the €19,000 level and then eventually the €20,000 level, which is my longer term target. This is a little bit of a bullish pennant, and the measured move certainly looks as if we could go looking towards the €19,500 level. At the very least with this, I think we have a situation where market participants continue to see a lot of value hunting on any dip, and therefore I think we get quite a bit of action every time we pull back.
Long Only at This Point
I don't want to short this market and the €18,000 level underneath, I think, is your hard floor. If you look at the European Union itself, it is likely to continue to go higher in the equity markets based on looser monetary policy. If nothing else. The ECB cutting rates will more likely than not make German and other European exports cheaper, so it allows for the larger companies in these countries to do well and of course Germany is in a different. After all, Germany has a major export economy, and therefore it’s likely to be a situation where cheaper euros will continue to propel the DAX higher.
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