DAX 40 Daily Price Analysis – Can the DAX Break 18,500 Today?

DAX 40 index experienced a modest pullback on Tuesday, after a positive close the previous day, currently trading at 18,406.47 with a 0.17% decline.

Key Points

• Gains yesterday were driven by optimism around ECB and Fed rate cuts.
• Despite today’s pullback, market sentiment remains cautiously optimistic.
• German producer prices and Eurozone inflation data could impact market expectations today.

DAX 40 Daily Price Analysis – 20/08/2024

The DAX 40 index showed a modest retreat today, following a positive close on the previous day. After opening at 18,437.82, it is currently trading at 18,406.47, reflecting a 0.17% decline. This slight pullback comes after the DAX extended its winning streak to ten sessions on Monday, closing at 18,322 with a 0.54% gain, buoyed by strong performances in the auto sector and optimism around potential ECB and Fed rate cuts.

Yesterday, the DAX benefited from continued optimism regarding interest rate cuts, particularly as concerns about a potential US recession eased. Key contributors to the index’s gains included Zalando SE, which rallied by over 3%, and major auto manufacturers like BMW, Volkswagen, and Mercedes-Benz, which all saw gains exceeding 1%. The positive sentiment was driven largely by expectations of a more dovish stance from both the ECB and the Fed, which bolstered demand for riskier assets such as equities.

Despite today’s early decline, the overall market sentiment remains cautiously optimistic. The DAX has been flirting with the 18,500 resistance level, and analysts suggest that a break above this level could pave the way for a move toward 18,750 or even higher. However, short-term pullbacks like today’s are seen as buying opportunities rather than signals of a trend reversal, particularly given the DAX’s strong performance in recent weeks.

Key Economic Data and News to Be Released Today

The focus today is on the release of German producer prices, which fell by 0.8% year-on-year in July, in line with forecasts. While this decline reflects ongoing challenges in the German economy, it may have a limited impact on ECB policy decisions for September. Additionally, investors are keeping a close watch on Eurozone inflation and wage growth figures, which could influence market expectations regarding future rate cuts. Any unexpected rise in these metrics could dampen expectations for further monetary easing, potentially applying downward pressure on the DAX​.

As the day progresses, the DAX’s movements will likely hinge on these economic indicators, as well as broader market sentiment ahead of key events later in the week, including the Jackson Hole symposium where Fed Chair Jerome Powell is expected to provide further guidance on the US monetary policy outlook.

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DAX 40 Technical Analysis – 20/08/2024

The DAX 40 is currently experiencing a pullback after reaching an intraday high near the R2 resistance level at 18,501.34. The index is trading around 18,404.49, close to the R1 level at 18,459.92, which it has recently dipped below. This movement suggests some profit-taking or consolidation after a strong upward movement.

The index’s ability to stay above the 200 EMA reflects a longer-term bullish trend, and the current price is significantly above this moving average, confirming that the market has been in a strong uptrend.

In the short term, the market is likely to find support near the pivot level at 18,392.88 and could potentially rebound towards the R1 level at 18,459.92. If buying pressure returns, the index might make another attempt to breach the R2 level at 18,501.34, aiming for a move towards the R3 level at 18,568.39.

Dax 40 Fibonacci Key Price Levels 20/08/2024

Short-term traders planning to trade the Dax index today should keep a close eye on the following key price levels for the day: