The German index fell a bit during the day on Wednesday, but bounce towards the end of the session. As you can see on the chart, I have a bearish flag marked, and if we can break down below the bottom of it, it’s likely that we go much lower. A breakdown below the bottom of the bullish flag could send this market looking for the €12,300 level. I think that the absolute “floor” in the uptrend is somewhere closer to the €12,000 level, which breaking below there would be extraordinarily negative. At that point, I would become a seller, but I do recognize that in the short term we may get a little bit of bearish attitude.
EUR/USD
The main driver in this pair for me is the EUR/USD pair. It has broken above a significant resistance level at the 1.15 handle, and by the Euro breaking out to the upside, it makes German exports a bit more expensive. However, I think that the fear will subside, as it may have more to do with European economic numbers becoming a little bit stronger. This being said, I think that the bearishness in this market is probably somewhat short-term, and I believe that the uptrend will continue to go much higher, perhaps reaching towards the €13,000 level above. I believe that area will be massively resistive though, as one would expect being a large, round, psychologically significant number. Ultimately, I think that the market will continue to find buyers on dips, and this is one of those times where longer-term traders are probably looking for value. Short-term traders will be happy to sell though. A break above the 12,500 level should continue the move higher. Either way, I think that we will see quite a bit of choppiness.
DAX Video 20.7.17
This article was originally posted on FX Empire