The German index broke higher during the week, slicing through the €12,500 level, which was previous resistance from the week before. The market looks as if it is going to continue to go higher, perhaps reaching towards the €13,000 level. Ultimately, this is a market that I think continues to find buyers, and ultimately, we will see this index reach not only to the €13,000 level, but break above there and continue to go even higher. I believe that the DAX will continue to lead the way for the rest of the European Union as we typically do see it react as, and I am a buyer of dips going forward. In fact, I believe that the uptrend is still very much intact if we are above the €12,000 level. A breakdown below there would change my attitude overall, but I don’t see that happening anytime soon, as the buyers have been so stringent and look likely to return on pullbacks as signs of value.
Buying on the dips
I believe that buying on the dips is the best way to play the DAX, as it is in a long-term secular bullish market. The market then goes to the 13,000 level before going to the 14,000 level later. This is a market that is choppy in general, but obviously well supported. Pay attention to the EUR/USD pair, if it breaks out to the upside it’s possible that it could work against the volume of German exports, which could be a very negative sign for this market. However, it appears that the DAX is continuing to chug higher, so I should believe that the buyers continue to be the biggest drivers of this market, and therefore we should continue to see that in the charts.
This article was originally posted on FX Empire