The German DAX continues to see choppy trading, but the SAP earnings have offered a bit of upward pressure to re-enter the market. The pattern at the moment looks a bit like a “rounding bottom.”
DAX
The German index initially fell during trading on Thursday but turned around to revive itself, as we have seen pretty decent earnings calls coming out of SAP, for example. That, of course, helps the DAX, as it is such a large part of the German index. This market is also going to have to worry about energy as well, as Middle Eastern tensions continue.
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It is also worth noting that interest rates in general have drifted lower around the world, and that is a potential bullish factor in Germany as well. The question now will be about energy and sustainable energy for that massive German industrial base, which has seen orders drop recently. There is a very uneven recovery going on in Germany.
The 50 Day EMA
From a technical analysis standpoint, we find ourselves hanging around the 50-day EMA. The 50-day EMA is also right around the €25,500 level. If we can break above the €25,700 level, then it is possible, I believe, that buyers will perhaps chase returns.
The 200-day EMA is sitting just above the €25,000 level, an area that clearly has been important on the chart and has a certain amount of psychology attached to it simply because of the big figure. This is a place where you could see a bit of “default” market memory. However, options traders will more likely than not be watching this area as well.
I am bullish on the DAX, but I recognize this might be a bit of a noisy rounding-bottom pattern trying to form itself. That means you are probably going to have to be somewhat patient with this index.
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