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MENAFN- Daily Forex)
The German DAX remains range bound near its 50-day EMA following the ECB's latest rate decision. Key support sits at €23,000, while resistance near €24,500 could open a path toward €25,000 to €26,000 if broken.
The German DAX has been slightly negative during the Thursday session, but we continue to see the same general pattern where German stocks continue to move sideways overall, which is interesting considering the European Central Bank came and went with its interest rate decision. I don't think there were any surprises there. All things being equal, the DAX finds itself hanging around the 50-day EMA, which is an indicator that many people will be paying attention to, and of course, it is relatively flat.
Overall, market participants are looking at this as a range-bound market. The €23,000 level underneath is a significant support level with the 200-day EMA hanging around there, but we are €1,100 above that. It looks like the 50-day EMA will continue to be important, as we have seen a significant amount of support over the last couple of weeks.
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If the market were to turn around and rally to the upside, the €24,500 level has offered resistance, and breaking above there could open up the possibility of German stocks rallying, driving the DAX to the €25,000 level-an obvious large, round, psychologically significant figure that many traders will be watching closely.
If you take the measured move of the consolidation area, it suggests we could reach somewhere around €26,000. That wouldn't be a huge surprise and wouldn't be out of order. The German economy is a little more sluggish than it once was, but quite frankly, most money is flowing into risk assets, waiting for central banks to come bail everybody out.
As far as the DAX is concerned, I have no interest whatsoever in trying to short this index. However, if we broke down below the €23,000 level, then the market could really start to drop toward the €20,000 level-but I think that would happen in conjunction with indices around the world falling. Right now, we just don't have that.
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