DAX falls initially during the week but find buyers

The German index initially fell during the week, testing the uptrend line. The uptrend line has turned the market around to form a massive hammer. The hammer is of course a very bullish sign, so if we can break above the top of the scandal, although I think that there is a lot of noise just above, we should eventually go to the €12,750 level. That’s an area that should be resistance, but if we can break above there I think that the market then goes to the €13,500 level. Expect a lot of noise, but it certainly looks as if the buyers have come back into the marketplace to let things and keep them somewhat afloat.

If we broke down below the bottom of the hammer for the week, that would be a very negative sign, perhaps unwinding the DAX down to the €10,800 level. However, there is a lot in the way of positive momentum over the last several months, and I don’t think that changes here. The DAX of course is a proxy for the entire European Union, and if we can avoid some type of trade war between the United States and China, stock markets around the world should benefit, the DAX included. Longer-term, I believe that we will go looking towards the €13,600 level, which of course was the most recent high for the DAX. I would build up a position slowly as you should have plenty of time due to the noise just above.

DAX Video 09.04.18