- The German DAX has initially rallied a bit during the early hours on Friday, but then gave back gains as I think we are finally getting to the point where we might get a pullback.
- The move has been ridiculous, but it is worth noting that we are also talking about Germany exiting a recession, so it does make a certain amount of sense.
- This is especially at the same time when you have the European Central Bank out there with loose monetary policy, you can definitely take a look at various indicators.
I do think given enough time, you have to acknowledge the fact that we are overbought on multiple levels. You have the RSI, the stochastic, which doesn't really handle trends well, but you also have the Bollinger Bands, which are most certainly showing signs of overextension. So, I think a bit of a pullback is likely, and I think it's needed.
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Support Underneath
The first level of support I see is at the 22,500 euro level, followed by the 21,650 euro level based on previous price action. I do not want to short this market; I just want to step out of the way and let it pull back in order to find a bit of value. Ultimately, this is a market that I do think will go higher. I just think that it's a little bit tired at the moment.
So, with that being said, we are probably going to be looking at a scenario where we'll have a couple of down days eventually, and once we do, then you look for the reaction, the bounce if you will, in order to take advantage of it. At this point, you can find yourself following the overall trend that we have seen for some time.
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