The German index has been very bullish for quite some time, and it is one that I have been scalping in the CFD market. It appears that the 20-day exponential moving average has been reliable, which is pictured in green on my chart. The red exponential moving averages the 50-day exponential moving average, and you can see that we have had a nice spread for quite some time, showing real momentum to the upside.
The candle for the Monday session reached towards the €11,900 level, but bounced enough to form something akin to a hammer. If we can break above the top of the candle I feel that the market will continue the uptrend. It just so happens that the top of the candle is €12,000, which is a nice psychological number that we can expect some type of reaction to, so if breaking above there happens, it shows continued bullishness.
I also believe that the €11,750 level carries a little bit of weight, not to mention the 20-day exponential moving average. I think that the DAX will continue to lead the rest of the European Union higher, as it typically does. The Germans will be in focus during the day due to announcements involving factory orders, and by extension the GDP number coming out of the European Union.
With this, I have no interest in selling, and I believe it is only a matter of time before the buyers return as the markets have been so reliable over the last several weeks. Given enough time, I think that we will break above the €12,000 level, and then eventually reach towards the €12,500 level after that. Expect lots of back-and-forth action, but the buyers should continue to be attracted on pullbacks as they represent value in a market that has been extraordinarily strong over the longer term. The DAX continues to be one of my favorite markets.
