- The German index formed a bearish engulfing candlestick for the trading session on Friday as we gapped higher and then plunged.
- That's not a huge surprise simply due to the fact that the jobs number in America were horrible and that has people worried about the global economy.
- That being said, the DAX and most other assets for that matter are still very much in consolidation.
The 23,250 level is significant support. And I think that it continues to be an area that you might be interested in. Above, we have the 23,954 level where the 50 day EMA sits. And if we can break above that, then we could open up the possibility of a move to the 24,600 level. We're closer to the bottom of the range than the top. So, I think a lot of traders will probably be looking for some type of bounce here, but until we get it, I think you have to be very cautious.
The German index is sensitive to global trade and global trade is certainly in question now. So, watch the 23,250 level because I think that will give you an idea as to where we go longer term. We do have the weekend to think about all of this and therefore Monday's opening might be a little bit off kilter and therefore you need to be very cautious. In fact, I would probably step back a bit and just let the market tell you what it wants to do.
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Further Consolidation is Possible.
If it bounces a bit, then fine, we just stay in the consolidation area, or at least that would be the assumption. With all of that being said, it is worth noting that we shot straight up in the air back in the beginning of April, and then since basically the beginning of June, we've gone nowhere. We have been working off some of this excess froth. I think we are getting ready to get a bigger move sooner or later.
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