The German index went back and forth initially on Monday, but found enough buying pressure later in the day to clear the €12,000 level to the upside, which of course is a very bullish sign as I have been saying for some time that the €12,000 level is where I think that the “floor” in the uptrend is, and a breakdown below there would send this market down to the €10,000 level. I think that the bounce and the strong move that we have seen on the 4-hour chart suggests that the buyers are returning, and that we will probably go looking towards the €12,400 level, and then possibly the €12,600 level after that.
If we were to break down to a fresh, new low, I think the market probably goes hunting the €11,000 level at that point, and then eventually the €10,000 level under there, which of course will be very important for longer-term traders, as it is a large, round, psychologically important number and of course an area that would have a lot of importance attached to it. Longer-term, I believe that the market should then go to the €12,750 level, which is an area that should offer a significant amount of resistance. A break above there should allow the market to go much higher, perhaps reaching towards the €13,500 level. Ultimately, I do think that the buyers will continue to run this market, but we obviously have some work to do.