The German index gapped lower at the open on Friday, and then fell towards the 12,100 level. We bounce from there to fill the gap, and it looks as if we continue to see resistance in that area. I think the market will probably go down to the €12,000 level, which is absolutely vital on the longer-term charts. I would suspect that we would see buyers in that area, but if we break down below the €12,000 level, that would be an extraordinarily bearish turn of events. Yes, the DAX has been very soft as of late but I think part of this has to do with the EUR/USD pair, as German exports become more expensive due to currency headwinds. Remember, the DAX is heavily laden with German exporting companies so this of course has a bit of an effect on the market.
Currently selling rallies
I am currently selling rallies in this market, as I recognize that the downward pressure has been rather extreme. If we broke above the €12,300 level, then I think that the buyers will have made a big enough statement for the market to reverse. I’m also paying attention to the currency markets, as the EUR rallying does no favors. However, if it turns run a search falling, that should be good for the DAX. Keep in mind that the markets are highly correlated in an inverse direction, so you must pay attention to both.
DAX Video 31.7.17
This article was originally posted on FX Empire