The German index went sideways on Friday, as we continue to see resistance near the 24-hour exponential moving average. Having said all that, there is a €12,300 level underneath a continues to offer support, so I’m not ready to start selling quite yet. I believe that the market will continue to be volatile, but I think if we can break above the €12,500 level, the market should continue to go even higher as the overall uptrend would remain intact, and it would show the market breaking above the massive resistance barrier that has been so influential in this market over the last several weeks. Because of this, I wouldn’t mind standing on the sidelines, but I recognize that there is a bit of outside influence in the market currently, so paying attention to currency will probably be the best way to be involved.
The influence of the EUR/USD currency pair.
The EUR/USD pair is highly influential when it comes to the DAX, as there are a lot of export companies in this index. The higher the value of the Euro, the more expensive it is to buy German exports around the world. This is obviously a very negative sign, and with this being the case it’s likely that if the market breaks above the 1.15 handle, the DAX will surely suffer as there would be a lack of selling power so to speak. Alternately, if the EUR/USD pair pulls back from the 1.15 level and start selling off, then the markets will probably favor the DAX, especially if we can break above the €12,500 level, as it would show that exports are more than likely going to continue to be sold in large volume, and perhaps that the selling opportunities could be helped.
DAX Video 10.7.17
This article was originally posted on FX Empire