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.

As long as the recovery supports of the price, which oscillates downward after the negative US production data, remain above the possible level of 18581.0, we can evaluate the opportunities up to the resistance of 18770.5 – 18851.5. In fact, we can predict the level current sales… pic.twitter.com/0D3xteeDUv

— Nefu (@__Nefu__) September 4, 2024

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.

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.

After September correction on #DAX, we are bouncing back: this week have a couple of data could be used as catalysts for further movements, a return of volatility. If market update ATH again in September, it will mean that last part of the year will be different from what expect. pic.twitter.com/LQPTLyXDCC

— Mirko Milito (@mirkomilito) September 10, 2024

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.