Index Drops Below the 50 Day EMA


Ultimately, the candlestick on Thursday does suggest that we have further to fall.

The German index tried to rally during the trading session on Thursday but gave up the gains rather rapidly. By doing so, the market has been broken down significantly to slice through the 50 Day EMA. This is a very negative turn of events, and it now looks as if we are trying to test the €14,250 support level. If we were to break down below that level, it is likely that the DAX will drop significantly. In fact, one has to wonder whether or not this has been a “throw-over”, which is also sometimes called a “false breakout.”


The German index will suffer at the hands of the fact that the German government has recently had to acknowledge that GDP numbers are coming in at much lower than anticipated levels. By doing so, this suggests that the market is going to continue to see negativity, as the downward pressure will certainly have been a bit of a “shot across the bow.”

A breakdown below the €14,250 level could open up a move down to the €14,000 level rather quickly, followed by the €13,500 level, and then possibly the €13,000 level. This has been a massive bounce, but now it looks as if the bullishness may be running out of momentum.

On the other hand, if we were to break above the €14,900 level decisively, then we could take on the 200 Day EMA, and then maybe even the €15,500 level. This would be a bullish sign obviously but would also take a significant amount of momentum to come into the picture in order for the DAX to rally like that. Because of this, I think it is much easier to break down than it is to bounce, but there is also 1/3 possibility.

The third possibility would be that the market goes back and forth in this general vicinity, with the €14,900 level being resistance, while the €14,250 level offers support. Keep in mind that it is the jobs number on Friday, and that has a significant amount of influence on the volatility and the risk appetite overall. If the risk appetite starts to wane, then it is likely that we will see the DAX fall right along with it, and of course vice versa. Ultimately, the candlestick on Thursday does suggest that we have further to fall.

DAX Index Chart



Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading in Contracts for Difference (‘CFDs’) carries a high level of risk and can result in the loss of all your investment. As such, CFDs may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with CFD trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. For more information about the risks associated with trading CFDs please find and read our ‘Product Disclosure’.

Please recognize that this website is the only official website, please do not enter other clone websites through Internet search or advertisements.

© 2011 - 2024 All Rights Reserved.