DAX Forecast: German Index Holds 25,000 Support as 25,500 Resistance Caps Upside

• The German index continues to see a lot of noisy behavior, but what captures my attention more than anything else is that we have plenty of resistance above that continues to see traders looking at it as a shorting opportunity.

• Markets will remain very noisy as we are trying to sort out whether or not the risk appetite is going to continue to be reasonably strong, or do we have to look at this as a market that is a simple day-by-day volatility experiment.

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Unfortunately, that has been the way we have acted recently, and I believe that we continue to look at the 25,000 level as an area that a lot of people will be watching for as a potential floor. If we were to break down below the 25,000 area, it could open up the possibility of a deeper correction, but ultimately, this is a market that I think will continue to see massive questions asked about whether or not energy is going to be a problem for the European Union and specifically, at this point in time, the German industrial sector.

The German Industrial Sector

After all, the German industrial sector is a major driver of what happens with the DAX as it is a huge economy that sends massive amounts of products around the world, and with this, I think you have to understand that traders will remain very concerned about whether or not the situation in the Middle East opens up supply.

It does look like we will have some demand going forward as far as further energy and that may have to come from the United States. If that remains the case, energy inputs become more expensive and Germany, of course, will suffer as a result.

That being said, it's also worth noting that the German government is expected to spend quite a bit of money of stimulating this economy, and with all of that money flying around, it should help some of the larger companies. We have seen the 25,500 level offer a bit of a ceiling. If we can finally break above there, then we could really get going. However, I do think that it will take quite a bit of effort to make that happen. I have no interest in shorting.

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