ABSTRACT: With the move of the last trading week, the hourly chart has brightened significantly. The bulls need to confirm Friday’s daily close at the start of the week. If the DAX index is able to establish itself above the SMA50 at the end of the day, there is a chance and prospect that it could move back towards the annual high.
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Current DAX analysis on September 17, 2023: chart analysis, Weekly outlooktrading setups and more – for active day traders
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DAX framework conditions:
The ECB continued to tighten interest rates on Thursday. The European Central Bank has raised interest rates for the tenth time in a row. After interest rates were at 0% last summer, they are now at 4.5%. Restrictive monetary policy has caused the economy to contract significantly in recent months. The construction industry in Germany in particular is confronted with cancellations or postponements of projects, while at the same time material and labor costs continue to rise. Inflation in Germany remains stubbornly above the 6 percent mark, although it should be noted that the effects of monetary policy can only be seen after a delay of 12-18 months.
This also prompted the central bank to point out in its statement that there will now be a pause in interest rate increases. The monetary authorities want to wait and see how the price increase develops in the coming months. This should also be understood as a signal to the economy. It remains to be seen whether the interest rate peak has been reached. The ECB initially assessed the price increase a good two years ago as temporary – a blatant error in judgment. There is no guarantee that inflation will decrease in the coming months. Energy prices are rising again, price increases are still noticeable in the food industry, with an increasing tendency to carry out hidden increases (same price, but a reduced quantity)
There is a narrow line that the ECB will walk in the coming months. On the one hand, it must retain its credibility, but on the other hand, there is a risk that the economy will continue to lose momentum. The central bank has maneuvered itself into this situation.
DAX review: (09/11/2023 – 09/15/2023)
The DAX went into premarket trading on Monday morning at 15,787 points. The index is therefore 104 points below the first pre-market quotation on Monday morning of the previous week but 41 points above the weekly closing date on Friday evening of the previous week. The DAX initially rose moderately on Monday, but subsequently gave up most of its daily gains. From Tuesday onwards there was some weakness. The index gradually fell. By midday on Wednesday it had reached 15,568 points. The bulls initially managed to stabilize the DAX. After a lengthy consolidation, prices rose noticeably on Thursday afternoon. As a result, it went well over 15,800 points. On Friday there was a GAP up (roll over) above 16,000 points, above this mark the bulls were able to set the DAX and send it into the weekend. The DAX joined 16,032 points from weekly trading.
The weekly high is above the 16,000 point mark and above the level of the previous week. The weekly low was formatted just below the previous week’s level. This trading week was a significant weekly gain (around 1%) reported; the 23rd this year. The range was significantly larger than the week before.
When we exceeded the 15,948/50 point mark on the upside, we expected that the DAX could reach our maximum target on the upside at 15,963/65 points. This movement has occurred, the maximum start-up target has been reached and clearly exceeded The setup didn’t work. The setbacks fell below the 15,683/81 point mark, just below our next target on the downside at 15,673/71 points.
DAX – What could happen next:
Dax resistances
- 16,037/45/53/82/99
- 16,114/23
- 16,204/58/84
Dax supports
- 16,000
- 15,985/64/53/50/12
- 15,879/31
- 15,796/93/82/78/31
- 15,617
- 15,588
The most important brands based on our setup:
- Intraday mark 16,213 and 15,642
- Daily closing marks 16,480 and 14,965
- Break1 Bull (Wo-End) (13,549)
- Break2 Bull (Mon end) (11,000)
- Box range 16,938 to 6,669
- Cyclical movements 2020 – 2033
- Range 18,149 to 1,778
DAX chart check – view in the daily / 4h chart:
DAILY
The DAX was able to stabilize overall in the last trading week. As part of the stabilization, the index was able to settle above the SMA200 (currently at 15,588 points) / SMA20 (currently at 15,588 points). These two lines were hit during the setbacks, but a recovery was achieved on these average lines. At the end of the week, the day closed above the SMA50 (currently at 15,974 points), above which the DAX then established itself.
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With this move, the hourly chart has brightened significantly. The bulls need to confirm Friday’s daily close at the start of the week. If the index is able to establish itself above the SMA50 at the end of the day, there is a chance and prospect that it could move back towards the annual high.
If there are any setbacks, they could stabilize at the SMA50. If this line is abandoned and the DAX slips below this average line again at the end of the day, the chart picture would become cloudy. Further taxes towards the SMA20 / SMA200 would be conceivable.
- Classification of higher-level chart image, forecast (Daily chart): bullish
View in the 4h chart:
The 4-hour chart shows that the DAX has reached the SMA50 (currently at 15,782 points) several times in the last few trading days, but was unable to move above this line. This only happened during the upward movement on Thursday afternoon. On Friday the move succeeded above the SMA20 (currently at 15,853 points) / SMA200 (currently at 15,853 points).
This means that the chart picture has brightened bullishly. As long as the index trades above these two average lines, further recoveries could occur that could move towards the annual high.
If there are any setbacks, they could initially go to the two average lines SMA20 / SMA200. If these two lines are abandoned again and the index establishes itself below these lines, further drops would be conceivable and possible, which could initially go up to the SMA50 area. If there are no recoveries within the range of this line and the DAX settles below the SMA50 again, this could be an indication that further sales could occur that have the prospect of reaching the August low.
- Classification of short-term chart image, forecast (4h): bullish
Conclusion: As long as the DAX can stay above the 50-day line at the end of the day, things could go up again towards the annual high. However, if the index settles below the 20-day line at the end of the day, it could continue to decline above the August low.
- Probability of a bull scenario based on our setup: 55%
- Probability of bear scenario based on our setup: 45%
Assessment for the new DAX trading week:
Long setup: The bulls could initially try to keep the Dax above the 16,030 point mark. If this succeeds, it could continue upwards to our next approach targets at 16,045/47, at 16,053/55, at 16,065/67, at 16,075/77, at 16,087/89, at 16,097/99, at 16,112/14, at 16,123 /25, at 16,137/39, at 16,151/53 and then go at 16,165/67 points. Above the 16,165/67 point mark, the DAX could reach our next target points at 16,179/81, at 16,194/96, at 16,203/05, at 16,217/19, at 16,230/23, at 16,248/50, at 16,261/63, at 16,275 /77, start at 16,289/91 and 16,309/11 points respectively.
Short setup: If the Dax cannot stay above the 16,030 point mark, the bears would have the opportunity to move the Dax to our next target levels at 16,018/16, at 16,002/00, at 15,985/83, at 15,974/72, at 15,964/62 , at 15,950/48, at 15,938/36, at 15,924/22, at 15,911/09, at 15,892/90 and then at 15,878/76 points. Below the 15,878/76 point mark it could continue downwards to our next target points at 15,863/61, at 15,847/45, at 15,831/29, at 15,817/15, at 15,804/02, at 15,790/88, at 15,775/73, at 15,759/57, at 15,740/38, at 15,725/23, at 15,710/08, at 15,694/92, at 15,680/78, at 15,669/67 and at 15,651/49 points.
Overarching expected DAX trend in week 38/2023:
source: xStation5 from XTB
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