DAX Forecast: Pulls Back from Familiar Level – DailyForex.com

The German index pulled back during the trading session on Thursday as the 15,800 level continues to be a major issue for the DAX. That being said, you could make a bit of an argument for an ascending triangle, and furthermore you can see that we have been in an uptrend for quite some time. Also, you can see that the 50 day EMA has been walking along an uptrend line for quite some time and therefore it is worth paying close attention to it. If we break down below the uptrend line, then it is very likely that we could go a bit lower.

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Breaking down below that uptrend line could open up the possibility of a move down to the 15,000 level, which of course is a large, round, psychologically significant figure that a lot of people would pay close attention to. Breaking down below there then the market is likely to go looking towards the 200 day EMA. To the upside, if we were to break above that 15,800 level, then the market is likely to go looking towards 16,000. Breaking above the 16,000 level then opens up an even bigger move for the continuation of the longer-term uptrend.

All of that being said, if we do break down in the DAX, I may look at other indices in the European Union to start shorting as the DAX typically outperforms other ones such as the CAC, IBEX, and so on. In that sense, the DAX is almost like a “long only index”, like a lot of the indices in the United States are. That being said, it can be used as an indicator for other indices.

To the upside, if we do break out, I think that the market closing on an impulsive uptrend candlestick would be the best thing that could happen, especially if we closed towards the top of the range, as the market would show real conviction to go higher. So far, there is really nothing on this chart to suggest that we should break down, but it is worth noting that some other European indices do look a little wobbly to say the least. With that in mind, I will be paying close attention to see if we get some type of bounce between here and that uptrend line to take advantage of.

Dax

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