• It looks like we are going to continue to see a lot of negative pressure.
• We are sitting below the 200-Day EMA, and it looks very likely that we will continue to see a lot of negativity going forward.
•  

depositphotos

After all, it appears that Germany is going into a recession, and of course the European Union itself is struggling overall. The United States entered a recession also is a major deterrent for buying risk assets such as the German index, so this tells me that all of Europe is probably just about to enter a troubled phase.

All things being equal, I think we’ve got a situation where all risk assets are trading is one, meaning that we probably have a situation where you will have to continue to look at this through the prism of a market that should be avoided, because quite frankly it doesn’t look like the “risk off behavior” globally is going to end anytime soon. With that being said, I think the best thing you can do is probably step to the sidelines, but this is the first place that you will see some type of recovery in Europe. Remember, Germany is the first place people look when putting money to work in the European Union, so this will be a bellwether for the rest of the indices also.

Technical Analysis

The technical analysis for the DAX right now is fairly bleak, and it looks like on the subsequent bounce during the early hours of Tuesday, the 200-Day EMA has offered a bit of a barrier that was difficult to overcome. Because of this, I think you’ve got a situation where traders or to simply going to look at this through the prism of whether or not they can recapture that major technical level. If they can, it could open up a move to the €18,000 level, but right now that doesn’t look likely.

On the other hand, if we were to break down below the low of the Monday flash crash, that could send the text looking toward the €16,500 level, which would be a significant selloff from the recent highs. All things being equal, I think it’s very likely that we continue to see volatility rock most of the stock markets around the world, and the DAX won’t be any different.

More By This Author:

Bitcoin Forecast: Continues To Look For Its Floor
NASDAQ 100 Forecast: Continues To Look For Bullish Buyers
EUR/GBP Forecast: Euro Rallies Against British Pound Yet Again