The German index has rallied a bit during the trading session on Monday, showing signs of strength to open up the week. I think that if we can avoid more talk of a trade war, that should only help the DAX.
The DAX obviously is highly sensitive to geopolitical concerns, such as the talk of a potential trade war. However, there is also the Italian situation which continues to weigh upon the markets. When I look at this market though, I see that the market has a significant amount of support underneath, and I believe that if we can break above the €12,800 level, the market should continue to go even higher. Overall, that should have this market looking towards the €13,000 level and beyond. We could be forming a “W pattern”, and I believe that the market is trying to solidify a bit.
Ultimately, I think that the market will eventually find buyers underneath, so dips should be thought of as buying opportunities. The €12,500 level of course offer support based upon what we have seen, and I think that given enough time that will be in the rearview mirror and we could continue to go much higher. I think that the €15,000 level above is the longer-term target, and if we can get some type of stability going forward, it’s likely that the market is going to continue to grind its way to the upside. I like the DAX as it is the gateway for most of the European Union, and it will be a great place to put money to work if the Italians can get it together. If they continue to have issues in Italy, this is also being a difficult market to own. Expect volatility, but we have formed a significant bottoming pattern over the last several days.
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.