The German index went back and forth during the week, testing the €12,500 level for resistance, but finding it far too much to overcome. However, looks as if the €12,300 level underneath is supportive. After selling off during the previous week, we now are starting to find some type of stability. If we can break above the €12,500 level, I would be bullish and we should then go looking for the €13,000 level. However, the currency markets will also come into play as the EUR/USD pair has been very strong over the last several weeks. Strengthening value of currency can cause a major problem when it comes to exports coming out of Germany, and that of course weighs upon the value of the DAX itself as it is so heavily laden with German exporting companies.
Volatility continues
I believe that we will continue to see quite a bit of volatility, and that the choppiness going back and forth will probably continue to be what we see over the longer term. Ultimately though, if we can break above the €13,000 level that should free the market to go looking for the €15,000 level. I believe that the €12,000 level underneath will be supportive if we do breakdown, and essentially that’s where I am calling the uptrend. If we were to break down below the €12,000 level, then I think we start to break down rather significantly. Pay attention to the EUR/USD pair, because if the market goes higher in that currency pair, the market should then go lower in the DAX as the correlation hold strong over the longer term. Given enough time, we should see a decision, and the fact that we sat still during this previous week is probably a good sign that the buyers are looking to get involved.
DAX Video 10.7.17
This article was originally posted on FX Empire