(MENAFN- Daily Forex)

• The German index rally initially during the trading session on Friday, reaching toward the 50 Day EMA, before pulling back a bit. All things being equal, this is a market that is still in the midst of some type of consolidative action, and we are trying to figure out where to go next.
• Ultimately, if we can break above the 50 Day EMA, that would be a very bullish turn of events, and it could open up a move toward the €24,500 level.

However, there is also a gap below that has yet to be filled, so we could see the DAX reach toward the €23,400 level, which would fill the gap. Ultimately, I think this is a market that continues to see a lot of back and forth action because quite frankly, there are a lot of mixed signals out there when it comes to the global economy, and by extension, the German economy. After all, there are 150,000 industrial jobs scheduled to be terminated in Germany over the next several months. In other words, we have to ask the question“Is there something wrong with Germany?”

Technical Analysis and Trend

The technical analysis for this market is bullish still, but at this point in time it's still a market that has been consolidating for a while, and why we are looking at the support level underneath at the €23,000 level, if we break down below there, then I think we could see a major shift in attitude of the market. Keep in mind that the 200 Day EMA sits just below there as well, but ultimately this is a market that as long as we can stay above that level, then it's likely that we could go higher given enough time. Perhaps we need to pull back a little bit in order to offer value, but only time will tell.

If we were to break above the 50 Day EMA, then the €24,500 level would be a bit of a target, as it had been significant resistance. Obviously, if we can break above there the market really should start to take off. However, keep in mind that most indices do tend to move in the same general direction, so watch New York as well as a potential tertiary indicator.

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