- The German index initially fell a bit during the early hours here on Monday, only to turn around and show signs of life. By doing so, it looks as if the market is going to do everything it can to eventually break out above this resistance barrier in the form of 24,500 euros.
- Keep in mind that Germany will lead the way for the rest of Europe. So you do need to pay attention to the DAX, even if you are not trading it and just trading other European indices. With this being said, we are at the top of an overall consolidation area between 23,000 euros on the bottom and 24,500 euros on the top.
Top Regulated Brokers
On a Break Higher…
If we can break above this area, then it opens up the door to reaching 25,000 euros, which obviously is a large round, psychologically important figure that will attract a lot of headlines. Regardless, I think what we have here is a situation where the market prefers the upside. That's generally true with indices anyway, but we had such a huge bounce from April that we've had to spend several months now, four and a half months or something, just working off some of that excess. Now the question is, will Europe see growth or maybe the ECB will cut rates? I think that's what we're looking at right here is that question being played out in real time. I like the idea of buying dips, and I think the 50-day EMA sitting tucked in just below the 24,000 euro level does offer a bit of support as well. The 25,000 euros level of course will be newsworthy and noteworthy, but I don't see it being particularly important other than the psychology attached to it. If we break out of this range, at least in theory, we should have a move to 26,000 euros based upon the measured move. I have no interest in shorting this market, and I do remain bullish despite the fact that you have to be extraordinarily patient at this point.
Potential signal: I am buying the DAX at 24600, with a stop loss at 24200, and a target of 25300.
Ready to trade our stock market forecast and analysis? Here are the best CFD stocks brokers to choose from.