- The German index has gone back and forth during the trading session on Thursday, as the European Central Bank interest rate decision has come and gone, with the ECB holding rates and “watching the data.
- Because of this, traders will start to look at the German index with the prism of a little bit of a “wait and see” scenario.
This means that we could go sideways, but it’s also worth noting that we are sitting just below the 50 Day EMA, an indicator that a lot of people will pay close attention to as it is so widely followed. It’s flat, so that suggests that we could continue to see a lot of sideways action, and the €23,250 level underneath offers a significant amount of support, while the €24,600 level above offers a significant amount of resistance. In other words, not much has changed after all of the noise coming out of the European Union.
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Hesitation
Ultimately, the candlestick that we ended up forming, essentially a doji, suggest that we just don’t know where to go next. Ultimately, this is a market that continues to see a lot of back and forth behavior, and the fact that we just didn’t really make an impulsive move in one direction or the other on Thursday suggests that we are in fact going to continue to stay in this overall range. That being said, we will eventually see a bit of momentum, and once we do there are a couple of potential outcomes that I am watching.
If we break down below the €23,250 level, then I think the DAX goes looking to the 200 Day EMA, near the €22,605 level. On the other hand, if the market were to turn around and take out the 50 Day EMA, breaking above the €23,920 level, then it opens up a move to the €24,600 level where we have seen a lot of serious resistance. Until then, things will probably be very tight, just as they have over the last couple of days.
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