The air is getting thinner – are 20,000 points possible?

The Dax continued its climb last week and rose to a new all-time high of 19,491.93 points. This means he is just under 500 points short of the big mark of 20,000 points. At the end of the week, the bottom line was an increase of 225 points (1.22%) at 19,473 points. On a weekly basis, this results in an increase of a whopping four percent. Price gains of three percent are expected for the seasonally weak stock market month of September. If there is not a severe sell-off today, which is unlikely, then the Dax should start September with a positive sign for the first time since 2019. Stock markets are having a big party, buoyed by China’s massive stimulus package and the growing belief that the US Federal Reserve and the European Central Bank (ECB) will further cut interest rates in the coming months.

Lower expected US inflation data also supports the assumption that the Fed is getting closer to its 2% target and has good reasons for further interest rate cuts. The PCE price data, which the Fed pays more attention to, rose “only” by 2.2 percent in August compared to the same month last year. This increased the probability of another major interest rate cut by the Fed to 53%. In Europe, too, market expectations that the ECB’s interest rates will continue to fall have increased. The markets are pricing in two more interest rate cuts this year.

Gap between economy and stock prices

It’s a paradox: Stock prices in this country are rising to new highs, while leading German economic institutes assume that Germany will remain in recession this year too. The economy in Europe isn’t doing particularly well either, but that isn’t stopping the stock markets from continuing to rise. The DAX is a “call” to the global economy and it is expected to recover thanks to the robust US economy, the central banks’ monetary policy easing and China’s stimulus bomb.

The most important data this week includes European consumer prices on Tuesday and the US labor market report next Friday. The data are considered important indicators for the monetary policy of the ECB and the Fed and could provide new impetus for the Dax and the US stock markets. The fall of the Japanese Nikkei 225 on Monday by almost 5% after the surprising election result has not yet weighed on the German leading index.

Dax: Next goal 20,000 points?

The breakout above 19,000 points initiated the next rally phase and released new targets on the upside. The end of the flagpole does not seem to have been reached yet either. But how high can the Dax rise now? Is 20,000 points possible? From a chart perspective, it is definitely possible. Attention, now comes the “but”. Because it is unlikely that the index will go straight to the big round mark. It would not be a surprise if the recent rally saw a consolidation before the DAX continued its rise. Traders should therefore keep an eye on the zone around 19,550/640 points. The index could well run out of steam here. In order for the bulls to continue to set the pace, the index should not fall sustainably below 19,000 points.

Dax: Next targets in sight

Long: The DAX remains at a high level shortly before the start of the stock exchange, thereby preserving the chance of a continuation of the upward movement. If the rise above 19,491 succeeds, it could set course for the next extension targets at 19,530 and 19,640. Since the index is heavily overbought (RSI above 78) in the short time window (H1), an imminent pullback is very likely.

Short: If the DAX remains below 19,491 or opens with a gap down (19,473), there could be a direct setback. A first starting point would be today’s pivot at 19,401. If we don’t see any reaction at this point, further taxes up to 19,373 and 19,311 are conceivable. There could then be a countermovement here. Below 19,311 the horizontal would come into focus at 19,230. But things shouldn’t go any lower in today’s trading.

Dax chart from TradingView

DAX supports (US)

19.401 – Pivot point

19,373 – intermediate low

19.311 – pivot point S1

19,230 – Horizontal

19,166 – Horizontal

19,040/000 – US Zone

18,918 – gap 09/25.

18,840 – daily low September 25th

18,800 – Horizontal

Dax resistors (WS):

19,473 – closing price September 27th

19,491 – all time high September 27th

19,530 – 127.2% overtime

19,640 – 127.2% expansion

20,210 – 161.8% overtime

The fundamental and technical analysis used here does not constitute investment advice. It is also not a purchase or sale recommendation for securities and other financial instruments. Past performance is no guarantee of future results. The analyzes provided are intended for informational purposes only and cannot replace individual investment advice. Liability for indirect and direct consequences from these suggestions is therefore excluded.

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