DAX Price Analysis: Bearish Momentum Below 18,500, Key Support Levels in Focus

Following news that Germany’s inflation rate had decreased to 2% in August, the European market’s optimism drove a 0.2% increase in the DAX index on Tuesday.

This marks the lowest inflation level since March 2021, providing relief to investors amid concerns about rising prices across Europe.

In contrast, the British FTSE 100 fell by 0.4%, as labour data indicated wage growth of 5.1% year-on-year for the three months ending in July.

Tech stocks also bolstered European indices, with SAP gaining 0.7% following Oracle’s strong earnings report.

AstraZeneca’s 5.1% decline as a result of its lung cancer drug failing to meet important survival targets, however, limited the STOXX 600’s 0.3% gain.

ECB Rate Cut in Focus as Real Estate Leads Gains

Due to expectations of a 25 basis-point rate cut from the European Central Bank (ECB) this Thursday, real estate stocks increased by 1%.

The ECB’s decision is anticipated to ease market pressures, with investors closely watching for additional cuts in October and December. The pan-European STOXX 600 index rose 0.3%, marking its second consecutive day of gains.

DAX Price Chart

Geoff Yu, senior macro strategist at BNY Mellon, pointed out that the ECB is unlikely to be overly dovish, stating, “The ECB doesn’t have a growth mandate like the Federal Reserve. Current sentiment remains more influenced by developments in the U.S.”

DAX Consolidates Ahead of Key Economic Data

Due to SAP’s 0.5% increase as well as additional gains from Airbus and Deutsche Post, the DAX index in Germany was hovering around 18,398.86.

The index is facing resistance near the 50-day EMA at 18,518, with further hurdles at 18,680. Despite the current rebound, bearish sentiment persists, with immediate support found at 18,276 and the next level down at 17,927.

The RSI of 39.00 suggests the DAX is near oversold territory, although a clear reversal signal remains absent.

Key Insights:

  • Immediate resistance at 18,518 and 18,680.
  • An RSI of 39 suggests oversold conditions.
  • The DAX faces continued bearish momentum below the 50-day EMA.

Conclusion:

As European markets eye the ECB’s upcoming rate decision, the DAX remains in a consolidation phase. Breaking above 18,518 could signal a shift towards a bullish outlook, but failure to do so may reinforce the downward trend, with key support levels at 18,276 and 17,927.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Avatar
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments