The German index has been negative on Tuesday, as we are looking at a market that is possibly driven back down yet again by rising rates, the same story we have been seeing played out recently.
The German index initially tried to rally a bit during the trading session on Tuesday but gave back gains near the 50-day EMA as German 10-year yields continue to strengthen. They are above 3.6%. The market gave back all of the gains rather quickly, but it still finds itself in the same trading pattern that it has been in, with the €25,750 level above being resistance and €25,250 underneath being support. This is an area that has been important more than once, and it will likely be important yet again.
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Ultimately, this is a market that I think, if it were not for the energy inflation issues, would probably be doing quite well. But, unfortunately, that is the main story here, so I think you have a situation where shorter-term traders will continue to use range-bound systems and indicators, such as a stochastic oscillator, to get an idea as to whether or not we are overbought or oversold, probably on shorter time frames, such as the hourly chart. In fact, on the hourly chart, we do find ourselves in an oversold condition with the stochastic oscillator crossing in that oversold condition.
Short-term traders might be interested in this market, as the range is well-defined
It is possible that short-term traders may be attracted to this market. Keep in mind that interest rates are the story right now, so you must pay close attention to them. If they rise, that is generally going to be bad, as it takes away risk appetite from Germany. So, watch the 10-year Bund yields and see how they behave. Stocks typically will go in the other direction. Ultimately, I like the DAX, but I also understand that the bond markets are what is driving this price action currently.
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