The German index has pulled back during most of the week but turned around to rally significantly and form a nice-looking hammer. This of course is a very bullish sign, suggesting that the uptrend is very much intact.
The German index initially fell during the week but turned around to find enough support to bounce and form a nice-looking hammer. The hammer of course is a bullish sign, and a break above the top of the hammer is a buy signal. The €12,750 level above should be resistive, and I think that given enough time we are likely to see the market try to break above there. If we do, then I think the next target will be the €13,000 level. Even if we do break down below the bottom of this hammer, I think that there is plenty of support near the uptrend line and more importantly, the €12,000 level to keep this market going higher.
It’s not until we break down below the €12,000 level that I would be looking to short this market, and at that point I think we would probably drop towards the €11,000 level rather quickly. The DAX has been very bullish overall, and I don’t think that’s going to change anytime soon as it is the benchmark for the European Union, so I remain optimistic and am willing to put money to work. My longer-term target for the DAX has been €15,000 for some time, and that has not changed.
I think that this will eventually be a “buy on the dips” situation, and I believe that most traders look at it the same way. The DAX will lead the rest of the EU indices, as well as perhaps give us a bit of a “heads up” as to what happens in America.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.