We have a lot to look at when it comes to this chart, so keep your position size tight, but it’s likely that we will see buyers.

• The German DAX Index rallied significantly on Tuesday to break through a short-term resistance barrier.
• The market is closing near the €13,922 level and has cleared the gap that I have marked on the chart.
• Furthermore, we have just wiped out the 61.8% Fibonacci level, so it does look like the DAX may have a bit further to go.

Is Germany Headed for a Recession?

The 200-day EMA sits near the €14,500 level, so that might be a target at this point. That is a large, round, psychologically significant figure as well, which is also worth paying attention to as well. Ultimately, the DAX seems to be ignoring the fact that Germany is going to head into a massive recession, but it is also possible that the traders in Germany are looking at the possibility of the ECB becoming as loose as possible. That is a very real possibility due to the fact that the economy is going to get so wrecked that it’s possible that the ECB will of course have to loosen monetary policy, and traders will celebrate the bad news like they do in New York.

Looking at this chart, you can also make an argument that if we were to turn around at this level and break down below the €13,600 level, the DAX could start to sell off again, perhaps looking to reach down to the 50-day EMA. We are still very much in a downtrend, but the move on Tuesday certainly suggests that we have a huge fight on our hands. The market has shown itself to be extraordinarily resilient, so it’s perhaps a situation where we make it a little bit of a pullback, as we are overbought. However, if we break above the top of the candlestick for the trading session on Tuesday, it’s likely that we will continue to see momentum.

It’s likely that if other stock indices in the world start to fall off, the German index will almost certainly fall right along with it. The volume is starting to decline a bit, so you can make that argument as a negative sign as well. We have a lot to look at when it comes to this chart, so keep your position size tight, but it’s likely that we will see buyers.

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We had sold off quite drastically over the last couple of weeks, so I would anticipate a short-term rally before continuing the overall malaise that we have seen in this market for so long.

• The German DAX Index initially dipped a bit in the futures market on Friday, but then turned around to show signs of strength.
• Ultimately, the market pierced the €13,000 level but found a bit of resistance there.
• The rally ended up being just under 9/10 of a percent, which is a good day at the markets.
• We are still very much in a downtrend, so one has to look at this through the prism of a market that is bouncing from extremely oversold conditions.

At this point, I’m waiting for signs of exhaustion that I can start fading. We clearly do not have that yet, but I think there is a huge case to be made for resistance at the €13,250 level, the €13,400 level, and then the €13,600 level. In other words, there is a lot of work to do to change the overall trend of the DAX, especially as the German economy has been less than thrilling to watch lately.

Germany’s Energy Woes

The ECB is essentially stuck with monetary policy because even though there’s a lot of inflation in the European Union, there’s no real way to fight it without causing major economic damage. After all, the Europeans cannot even provide their own energy at the moment and have gone so far as to label natural gas as “green energy”, right along with nuclear. Nuclear power has been taboo in the European Union, so this shows you just how desperate things are getting with the situation involving Russian gas.

Looking at this chart, the 50-day EMA is sloping quite drastically to the downside, and it looks like we are going to continue to see sellers at rallies that show signs of exhaustion or an opportunity to get short again, and I do think that eventually, we may have to threaten the €12,500 level again. If we break down below there, then it’s likely that we go much lower, perhaps down to the €12,000 level. Obviously, we had sold off quite drastically over the last couple of weeks, so I would anticipate a short-term rally before continuing the overall malaise that we have seen in this market for so long. It is not until we break above the €13,600 level that I would start to take a rally seriously, and at that point I would have to pay close attention to the overall economic situation globally.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy.

• The German DAX index drifted a little bit lower to kick off the trading session on Monday.
• The index broke down below the €12,500 level, before bouncing a bit.
• By the end of the day, we ended up forming a bit of a hammer.

This suggests that we could get a bounce, but it’s also telling that we continue to threaten the same support level time and time again. In other words, it’s very likely that we will continue to see rally sold into, which makes quite a bit of sense considering what is going on around the world.

Economic Impact

Keep in mind that the DAX has a lot of export-laden companies built into it, so the rest of the world certainly has a major influence on what happens in Germany. With the entirety of the world looking likely to go into some type of recession, this has a major influence on these exporters and German markets will probably continue to struggle. Furthermore, you also have to worry about the fact that the German economy looks like it’s about to take a major nosedive.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy. That being said, I think we are going to see a situation where we get a little bit of a bounce, but a lot of people will be looking at that bounce as a shortening opportunity. At the first signs of exhaustion, it’s very likely that this market falls, especially with the 13,000 level above being a large, round, psychologically significant area of resistance, and of course has shown itself to be important in the past. Above there, the 13,250 level is another area that you need to pay close attention to.

The alternative is that if we break down below the bottom of the candlestick from Tuesday, the market is likely to drop down to the 12,250 level, possibly even the 12,000 level after that. We have been falling rather hard recently though, so I think it’s more likely that we see a bounce here in order to build up more downward momentum. If we break above the 50-day EMA, then it’s possible that we could see a move to the upside, but that would take a massive shift.

I remain bearish and have no interest in trying to fight the overall trend.

The DAX pierced support Tuesday as we continue to see a lot of negativity. The €12,500 level is an area that a lot of people would be paying close attention to, and it’s not a huge surprise to see that the market has tried to recapture it. That being said, I do not think that the market is likely to continue seeing any real fight, and it’s probably only a matter of time before this market breaks down again.

The size of the candlestick is worth noting as well, as it is a very long candlestick, suggesting that there’s a lot of momentum to the downside. The market breaking down below the bottom of the candlestick would signify even more negativity coming into the market, with fresh sellers jumping all over the DAX. Keep in mind that the market will continue to look at the reality of the European economy struggling. After all, we are even hearing stories of Hamburg having to limit hot water usage. This is not the sign of an economy that’s going to be doing well.

Rallies at this point should find plenty of sellers above, especially near the €13,000 level, and then eventually the €13,250 level. At that point, I would anticipate that the market will show plenty of exhaustion, and I don’t see any reason whatsoever in going long. Underneath, I think the market could find its way down to the €12,000 level, which is a large, round, psychologically significant figure, and an area where we have been noisy in the past.

It is not until we break above the €13,500 level that I would consider this as a market that I can be a buyer of. If that were to happen, then we could see a move to the €14,500 level. The 200-day EMA sits just below there, so I think that could offer quite a bit of resistance as well. Either way, the market looks very soft, and I just don’t see a scenario where I should be a buyer of the DAX. You will probably see the US recover much quicker than the European Union, especially Germany which has quite a few problems at the moment. With this being the case, I remain bearish and have no interest in trying to fight the overall trend.

This continues to be a market that I want to take advantage of every time it tries to recover and shows a long wick to the upside.

The German DAX Index went back and forth on Monday as traders still have no real clue as to what they want to do. The €12,775 level has seemingly held for the session, but we are drifting lower overall. Remember, as Germany goes, so goes the rest of the European Union. In other words, this is a chart you should be paying close attention to, because it will have an effect on other indices such as Paris, Amsterdam, and Milan. Furthermore, it can also have an effect on the euro and vice versa.

The fact that we are continuing to slide lower tells me that we have further to go, and rallies at this point in time should be looked at with the utmost suspicion. In fact, I think of them as “gifts” for those who jumped in and tried to front run any type of bounce. Furthermore, if you have the ability to short this market, may very well find this a tempting set up on any signs of exhaustion after a bounce.

Take a look at the €13,600 level, it looks as if it is a ceiling in the market, and that’s only assuming that the market can break above the €13,200 level, which I’m not entirely convinced that it can. Ultimately, it’s more likely that we continue to break down and reach toward the €12,600 level, followed by the €12,500 level. Anything under there would have me looking for €12,000 rather quickly.

Keep in mind that DAX is highly levered to global trade, as most of the major players on this index are massive exporters of industrial goods. Because of this, the DAX will continue to suffer due to the fact that it looks like we are heading into a global slowdown. In that scenario, there’s no real reason to think that stocks go well, be it in Germany or anywhere else. The market has been very noisy to say the least, but the one thing that has been clear at this point is that sellers certainly have the advantage. Ultimately, this continues to be a market that I want to take advantage of every time it tries to recover and shows a long wick to the upside. We would need to break above €13,600 to even begin the conversation of this market looking bullish.

The German DAX fell really hard to kick off the trading session on Thursday, crashing into a support area just above the €12,500 level before bouncing almost €300. This is the behavior of markets that are broken, and it is probably only a matter of time before something quite drastic happens. I don’t want to put too much money into these markets right now, because it seems like nobody knows what they’re doing, and the machines have taken over.

The ECB finds itself in a very difficult situation because it is dealing with a slowing economy that not only has to worry about slowing growth but inflation and a lack of energy production. In that scenario, the ECB can pretend that it’s going to start raising interest rates, but it will only do a token rate hike here and there because it is stuck. It’s really difficult to get dozens of economies to behave the same way, and I think the ECB is showing just how impossible that task is.

That being said, if the ECB loosens enough, then it’s possible that the DAX may be a beneficiary as so many German companies are major exporters. However, the global economy seems to be slowing down and then of course will show itself here as well. If you are a major German corporation, you have to worry about the health of your consumers, because it seems as if everybody is broken. Supply chain disruptions continue to be a major hamper to profits as well, so all of that being said, I remain bearish despite the fact that we had such a nice bounce during the day.

Be €13,500 level should offer a bit of resistance, as it was previous support. If we approach that level and show signs of exhaustion, I will not hesitate to start shorting again, because this is a market that has been very bearish for a while, and with good reason. It is not until we break above the €13,750 level that I would consider a rally one of substance, and then I think we need to challenge the €14,500 level before we can start to talk about a trend change. As things stand right now, it’s just easier to fade rallies in the DAX, just as it is in other indices.

Ultimately, I have no interest in buying this market, at least not until the ECB changes its attitude, or something fundamental does.

The German index has broken significantly lower during the trading session on Thursday as we have sliced through the €13,000 level. Ultimately, this is a market that I think will continue to see negative pressure, mainly due to the fact that the German economy has less than stellar economic numbers, and then of course the fact that there is a major global slowdown in the sights of traders right now.

The reason this is so important is that the DAX has quite a few major exporters on the index, so it has a major influence on whether or not German companies are going to make money. As corporate earnings continue to be written down soon, it more likely than not will only add more negative pressure on the DAX. All things being equal, risk appetite is almost nonexistent at this point, so it does make sense that stock indices continue to struggle. Any rally at this point should be thought of as a possible “bear market rally” from time to time. I would not look at it as much more, at least not until the ECB gets involved.

Speaking of the ECB, they have recently suggested that they are going to become a bit more hawkish, but then they had a private meeting discussing bond yields in Italy. In other words, they may have to turn things right back around, as the German economy is struggling, right along with the rest of the European Union. After all, there is a serious lack of energy as the natural gas coming in from Russia continues to trickle.

With that being said, and the lack of economic growth, it’s very difficult to see the DAX takeoff in this environment. I think given enough time, we will see sellers on rallies, especially near the €13,500 level, assuming that we even get that big of a bounce. I believe that the market is more likely than not going to see plenty of selling pressure, and perhaps even an attempt to get down to the €12,500 level. If we can break down below the €12,500 level, that could open up a €2000 drop based upon the big “M pattern” that we have seen. Ultimately, I have no interest in buying this market, at least not until the ECB changes its attitude, or something fundamental does.

Ultimately, we are in a downtrend and I just don’t see that changing anytime soon.

The German DAX Index fell rather hard on Wednesday to reach the €13,000 level. The DAX found a bit of buying pressure in that area, so it does make a certain amount of sense that we would see a shorter recovery.

The €13,000 level is an area that a lot of people will be paying close attention to, as it is a large, round, psychologically significant figure and an area that has been supportive previously. If we were to break it down through the €13,000 level, it’s likely that the DAX will continue to go much lower. At that point, I would anticipate a move to the €12,500 level, perhaps even down to the €12,000 level.

A rally at this point will continue to have to find momentum, it is difficult to see where we would break above the €13,600 level rather quickly. After all, we have seen a lot of selling pressure in that area previously, so I do think that every time we try to rally, then it’s a short-term selling opportunity. I think that the DAX will fall right along with the rest of the indices globally, as there are a lot of issues around the world. After all, inflation, supply chain issues, and a lack of growth are all reasons to think that stock markets will continue to fall. Keep in mind that the DAX is the “blue-chip index” of the European Union, so it’s a good barometer as to how things are going.

If we were to break above the €13,600 level, then it’s possible that we could make a move to the 50-day EMA, but I think that is a short-term opportunity at best, and I don’t see that happening without some type of major change in central bank policy, and inflationary headwinds. Because of this, signs of exhaustion will continue to attract selling pressure, as the DAX will more likely than not follow clues from Asia and the United States. Right now, it seems like every time we rally, there are plenty of people willing to jump in and push the market much lower. Ultimately, we are in a downtrend and I just don’t see that changing anytime soon.

I have no interest in buying as things stand right now.

The German DAX Index initially tried to recover a bit on Tuesday but turned around and fell apart. Because of this, the market looks as if it’s ready to take out this support area, which then could see a flush lower. At that point, I would anticipate that the DAX will go looking to reach the 12,500 level over the longer term. It may take a while to get there, but then again, we could see this market fall directly to that level depending on just how much concern there is around the world. Certainly, this is a market that looks very weak, just as most stock indices do right now.

If we do rally, we need to take out the 13,600 level to begin to talk about recovery. Even then, it’s very unlikely that we will recover completely because there are so many fundamental problems with the world economy right now. Ultimately, this is a market that seems as if it will fall given enough time, so I look at rallies as potential selling opportunities. Even if we do take out the 13,600 level, then we could approach the 14,000 level. The 14,000 level is a large, round, psychologically significant figure, and I think a lot of people will be paying attention to it.

Central banks around the world continue to tighten monetary policy, and that is going to cause some issues for several markets. I do not think that the DAX is going to avoid some of the major problems that the rest of the world will deal with, so you should keep an eye on the DAX for some type of “heads up” as to what other indices will do, especially on the European continent. Keep in mind that the DAX is one of the first places that money goes running to when it is heading to the EU. Alternately, if the DAX falls from here, then it’s likely that the MIB, IBEX, AMX, and many of the other smaller European indices will fall right along with it. Be cautious about your position size, but once the floor falls out of this market, it’s probably going to get rather ugly, and once we do break down, I’m probably going to jump all over this potential setup. I have no interest in buying as things stand right now.

Things are going to get ugly, and the DAX is just one of many indices that has to deal with the ugliness out there.

The DAX broke down again on Friday as we continue to see a lot of negativity in equities overall. Furthermore, the 14,000 level has been sliced through, and it looks as if we going to continue going much lower. At the 13,500 level, there’s likely to be a little bit of selling pressure every time we try to rally because the German index is a bit of a window into the outlook for the European Union.

Rallies at this point in time will continue to be looked at with suspicion, especially with the 50-day EMA sitting just above at the 14,250 region, an area that should continue to attract a certain amount of attention. If we do rally from here, I suspect that the first signs of exhaustion will get jumped upon, as we are more likely than not going to continue to see a lot of negativity. If we break down below the 13,500 level, then it’s very likely that the 13,200 level gets targeted next.

The DAX is highly sensitive to global risk, as so many of the major components of the index are massive exporters. On the other hand, you also have to pay attention to the European Union economy itself, because Germany is the engine of it. In other words, there’s not much out there that makes me think that we are going to go much higher. Because of this, I think that not only will the DAX suffer, but indices overall will. Keep an eye on what happens in Asia on Monday morning, because if the Japanese start to sell off drastically, that might lead to a continuation of overall negativity. The inflation numbers in the United States were horrible, so that suggests that the Federal Reserve is going to continue to tighten monetary policy. While most retail traders will not make the connection, a stronger US dollar will continue to punish countries around the world that have borrowed so much in those very same US dollars as they try to pay them back. In other words, things are going to get ugly, and the DAX is just one of many indices that has to deal with the ugliness out there. Given enough time, I would not be surprised at all to see this market reach its lows again.