(MENAFN- Daily Forex)
The dax has gone back and forth during the session on Wednesday, as it looks like we are hanging on to the minor support from the recent consolidation. That being said, the DAX has also tested the €14,500 level, and failed. Now it looks like we are forming a bit of a“rounding top” pattern, while not my favorite, it does show that the market is trying to roll over.
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If we were to break down below the €14,000 level, I think at that point in time you would see a lot more of a deeper correction, as we would be threatening the 50-Day EMA, and of course the 200-Day ema . Speaking of those 2 indicators, the 50-Day EMA has broken above the 200-Day EMA, forming the so-called“golden cross.” However, that is an indication that typically happens far too late to be useful, so while I'm aware that some people look at this as a longer-term“buy-and-hold” indicator, I also recognize that it cannot be the only reason you take a position. Rallies Are to be Faded
If we do breakout above the €14,800 level, then it's possible that we could see a continuation of the overall uptrend. Ultimately, I think this is a market that needs some type of catalyst to make that big move, so I'm not looking for that to happen easily. With this, I think rallies are to be faded, especially if the first signs of exhaustion. The noisy behavior will continue to be a major factor in this market, so I believe that trading the DAX will be easier to do on short-term charts with more of a range-bound type of argument. I think short-term back-and-forth trading with little bits and pieces at a time probably works out the best.
Regardless, this is a situation where we at the very least need to consolidate and think about the move and whether or not we had gotten far too ahead of ourselves. It's possible that we may have to consolidate some of the froth out of the market, and then go higher. A lot of this is going to come to risk appetite, which quite frankly isn't that strong globally. Remember, Germany is a heavily export-dependent economy, so other parts of the world have an effect on this market as well, as it does not operate in a vacuum.
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