- The German DAX initially pulled back during the trading session on Thursday but found enough support near the 50 day EMA to turn things around to ensure signs of strength later in the day.
- For what it is worth, the Americans look like they are jumping on board as well.
- So, it certainly looks as if we have a situation where it's possible that the global equities markets in general are rising. This continues to be the case overall with a lot of indices worldwide.
If this is going to be true, then it makes a lot of sense that we would see Germany lead the way because Germany, of course, is heading out of a recession while the United States, for example, may very well be heading into one. We just don't know yet. With that being the case, it does make a certain amount of sense that the DAX would continue to reach towards the gap above, which basically puts us at 22,400 euro.
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The 50 day EMA attracts attention, but we also have a pretty significant previous resistance barrier that could offer support near the 21,500 euro level. Ultimately, this is a market that given enough time, I do believe recaptures the highs, but right now it's more of a buy on the dip kind of tactical trading setup that I think we'll continue to see.
If we break down below the candlestick from the Tuesday session at 21,000 euro, then I think you'll probably see the DAX drop significantly, probably right along with many other indices around the world. I don't think it's just the DAX that we would see a lot of negativity in if that were in fact going to happen. In that environment, we could see a massive “risk on moment.” This continues to see a lot of correlation between various markets, but Germany has been especially strong.
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