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German Dax Rally Remains Intact Despite Slowing Momentum

German Dax Rally Remains Intact Despite Slowing Momentum

Tammy Da Costa, Analyst
What's on this page

German Dax Index Price Outlook:

  • Dax 40 futures break major psychological resistance now holding as support at 15,000.
  • German equities move higher with industrials leading gains.
  • Retail sentiment currently remains bullish suggesting that short-term price action could continue to rise.
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DAX 40 Holds Above 15,000 as Industrials Lead Gains

German equities have edged higher in today’s session driving Dax 40 futures back towards 15520. With industrials and consumer non-cyclicals rising 1.49% and 1.44% respectively, the healthcare sector declined by 0.82%.

image1.png

Source: Refinitiv

Although the major European stock index remains vulnerable to changes in the geopolitical backdrop, the recent recovery suggests that bulls aren’t ready to surrender just yet.

Visit the DailyFX Educational Center to discover the impact of politics on global markets

Dax 40 Technical Analysis

On the daily chart below, the strong uptrend that has persisted since the December low has been losing steam. With a narrow zone of consolidation forming between 15000 and 15200, the recent formation of low-bodied candles is suggestive of a strong zone of resistance.

Dax 40 Daily Chart

A picture containing text, sky, map, line  Description automatically generated

Chart prepared by Tammy Da Costa using TradingView

After reaching an all-time high of 16295 in November 2021, failure to gain traction above the January 2022 high of 16274 forced Dax futures lower. As the onset of the war in Ukraine approaches the 11-month mark, equities have made an impressive recovery which has driven the German 40 above prior psychological resistance now support at 15000.

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Dax Weekly Chart

Chart, bar chart  Description automatically generated

Chart prepared by Tammy Da Costa using TradingView

As the weekly chart above highlights the zone of support and resistance which has assisted in driving price action since April in 2021, a break of 15220 could assist the upside move.

While German Dax futures have followed other global indices higher, a rise above 14682 and above the March 2022 high of 14945. Although yesterday’s daily candle and the current candle are struggling to gain traction, a fresh bout of bullish momentum could see prices heading towards the next big barrier of resistance at 15400.

Above 15400, the 78.6% Fibonacci retracement of the March 2022 move looms, holding firm at 15454.

Dax 40 Sentiment

Chart  Description automatically generated
Germany 40 Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 0% 0%
Weekly -1% -1% -1%
What does it mean for price action?
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At the time of writing, retail data shows that majority of traders are net-short Germany 40.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Germany 40 prices may continue to rise.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany 40-bullish contrarian trading bias.

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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