The German index initially fell on Thursday, but it looks as if we are going to see quite a bit of buying pressure right along with the DAX heading towards a major ceiling.
I think there is a big showdown coming at the 25,000-euro level and if we can break above there, then I think it opens up the possibility of a move to the 25,500-euro level.
Short-term pullbacks continue to offer buying opportunities. I think the 24,000-euro level below is a floor in the DAX market. I do think that a pullback is more likely than not, but we'll have to wait and see.
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Technical Support and Macroeconomic Headwinds
If the 10-year yield in Germany starts to rise again, that could put enough downward pressure on the DAX to keep us in the same consolidation area that we've been in. That would make a lot of sense because we've been hanging around in a 1,000-euro range for about 2 months. And fundamentally speaking, not much has changed.
So, with that being the case, I think you've got a situation where you may get a little bit of a give back on Friday, but that's okay, it's not necessarily terminal. It just gives you an opportunity to pick up cheaper contracts at lower levels.
Beyond the interest rate situation, you also have to keep in mind that there are questions about energy in the European Union this year as the supply will be damaged with those strikes in Qatar and other places around the Middle East that are major suppliers to Europe. Ultimately, I like the idea of buying the dips. I think we're just a little stretched at the moment.
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