The German DAX jumped quickly on Friday, as the interest rates in Germany dropped.
DAX
The German DAX broke to the upside during the trading session, gaining almost 2% as the yields in Germany fell below the crucial 3% level on the 10-year yield. The headlines coming out of the Middle East continue to be very positive, so I think you have to assume that Germany is celebrating because energy may be cheaper, and that of course is a major component for industrial manufacturing in Germany, which is a huge part of the DAX.
With that being said, I think it makes a lot of sense that we continue to see a lot of upward momentum, but I also recognize that we have a situation where we are probably going to have to be very cautious and understand that the headlines could change rapidly, and if they do, then we could have a problem.
Ultimately though, short-term pullbacks I think offer buying opportunities, perhaps with the 24,200 level being a floor. Below there, then the 24,000 level becomes interesting, and this is an area we launched from.
Technical Momentum and Upside Targets
Given it enough time, I do think that we will eventually see this market reach towards the 25,000 level and then break above there. I’m very cognizant of the fact that traders continue to be very jittery, but we have seen a massive amount of upward momentum and the size of the candle right along with the volume does tell me that it’s likely that we will see continued pressure.
There is a gap just above the 25,000-euro level that you will have to watch, but if we get above 25,000, that gap could get filled rather quickly and perhaps even blown through. We’ll just have to wait and see. I have no interest whatsoever in shorting this market. I do think it probably breaks to fresh new highs sooner or later.