DAX and EU correlation

FX:GER30   DAX Index
DAX seems to be recovering steadily from the recent crash.

However I am not convinced that this will be sustained, it looks like we may be witnessing a dead cat bounce in all the stock markets. The rally being heavily influenced by the Chinese rally currently taking place. It seems investors are gaining confidence from the recent gains in the Shanghai market. The question is, is this sustainable? The markets are vulnerable to another drop if something goes wrong in China we will see another panic sell take place.

As always I don't follow these fundamentals I let the charts tell me where price is going, I just wanted to add some confluence to what my techs are showing me.

The correlation between the DAX and EURUSD has been very strong recently, so much so that when the EURO is up DAX is down and vice versa. The chart shows that when the two meet the touch can be used as support, indicating a turning point in the market.

Currently EU is dropping with my target at 1.1 support. This is a key level that should hold, in which case it does the correlation support idea will be fulfilled and we can expect a strong rise in the EURO             with targets of 1.15. This rise in the EURO will fuel the DAX into another dramatic drop.

I am watching the EURO             and DAX             closely at the moment and biding my time.

Happy Trading
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