The German index has initially tried to rally during the week, making a fresh, new high. However, it was a bit far, and we turned around as the EUR/USD pair rallied significantly. The breakout of the Euro against the US dollar makes exports out of Germany a bit expensive, so it makes sense that there will be a bit of concern by DAX traders. Longer-term though, it’s likely that we will continue to see a lot of volatility, with an upward slant as the 20 SMA is pointing decidedly upward. I believe that the market has plenty of support in a psychological sense at the €13,000 level, and then structurally at the €12,750 level. Because of this, I look at the pullback as healthy, and a potential opportunity to take advantage of what has been a very nice uptrend.
Longer-term, I believe that the “floor” in the uptrend is the €12,000 level, so it’s not until we break down below there that I am willing to start selling this market, as it is an area that has been massively supportive in the past and would be a sign that we broke down rather drastically. There is a lot of noise, but overall it seems as if value hunters continue to be active in this market, and that we should continue to go higher as a result. The marketplace continues to be an opportunity for traders to take advantage of momentum, so given enough time we should ultimately find upward pressure returning.