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DAX struggles during volatile Thursday session

By:
Christopher Lewis
Updated: Jun 1, 2018, 04:38 UTC

During the day on Thursday, the market broke down below the vital €12,750 level, and reached as low as €12,550 as the Americans are now going to place tariffs on the Europeans, Mexicans, and Canadians. This has caused the world’s markets to go back and forth again, and therefore it’s almost on investable.

Dax daily chart, June 01, 2018

It seems as if a trade war is something that the Americans want. Granted, this could all be a bit of a negotiating stance, but at the end of the day I think it’s obvious that the markets don’t like this uncertainty. If the goal was to throw disarray into the markets, it certainly was accomplished. The currency markets have been on fire in both directions, and quite frankly the computers can’t figure out what they want to do. The DAX of course will be influenced by that as it is the mainstay and bellwether of the European Union.

The European Union has already said that it would retaliate, within WTO standards. So I think that this is going to be a very difficult market to trade, and at this point I’m not willing to put money to work until we can break to a fresh, new high, something that we did just yesterday. However, with this type of volatility and uncertainty, fools rush in at this point. Don’t get me wrong, I still favor the upside longer-term, but clearly we have a lot of noise to chew through. Perhaps if we get some type of clarity, then things will change. But right now it’s obvious that we don’t have clarity, and I don’t know that we are going to get it anytime soon. All things being equal though, as I record this we are only down about 1.3%, so that’s probably a positive.

DAX Video 01.06.18

About the Author

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.

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