German index has bully session on Friday

The German index rallied a bit during the day on Friday, reaching towards the €12,800 level. By doing so, we are forming a large “W pattern”, which of course is a very bullish sign. If we can break above the €12,850 level, the market is likely to go much higher, as it would complete the overall “W pattern”, and trigger more buying based upon it. Otherwise, we could drift down towards the €12,600 level underneath, which would be relatively supportive based upon the “double bottom” that this pattern has formed.

I believe that the DAX will continue to be very sensitive to what goes on in Italy, mainly because the DAX itself is considered to be the “blue-chip index” for the European Union. I believe that ultimately, the market will break out to the upside and go looking towards the €13,000 level above, which of course is a large, round, psychologically significant number. We have been in and uptrend longer-term, but by pulling back the way we have the form a supportive area, I think it’s only a matter time before value hunters come in and try to take advantage of this. We are going into the weekend on a rather positive note, so if we get good headlines coming out of Rome over the weekend, that should also push this market to the upside. I believe that the DAX is offering value the people are willing to take advantage of the relative near-term, and I think that we should continue to see the market trying to build up bullish momentum.

DAX Video 04.06.18