DAX Rebounds, but 25,600 Remains the Level to Hold

DAX 40 Technical Analysis: Recovery Gains Momentum as Inflation and Geopolitics Keep Markets on Edge

Friday, 16 October 2026 | Daily and 4-hour outlook

The DAX 40 is showing signs of recovery after a volatile period that saw the index retreat from its late-August high near 26,600 and test the 24,800–24,900 support region in early October. Buyers have since returned, with the index now recovering to above the  25,600 level. The rebound has improved the short-term outlook, although the market still faces important resistance before a sustained bullish reversal can be confirmed.

Daily Chart: Buyers Defend a Critical Support Zone

The daily chart is becoming more constructive. The DAX has defended its 200-day moving average twice this month, with the average currently around 24,883. The early-October lows near 24,800–24,900 have also created a potential double-bottom formation.

The index has subsequently reclaimed its 20-day simple moving average near 25,360.

The first important resistance lies at 25,450 (EMA 50), followed by 25,500 (previous cycle high and psychological level). We are now broken above those levels and a remaining above these levels for the day would strengthen the bullish case and suggest that the DAX is beginning to recover a larger portion of its August–October decline. The next target would be the 50EMA at 25,750.

On the downside, 25,250 (yesterdays low) is the first important support, followed by 24,880 (previous cycle low). A decisive break below the latter would invalidate the developing double-bottom structure and expose the market to another leg lower.

Four-Hour Chart: The Recovery Needs Confirmation

The four-hour chart presents a cautiously bullish picture, we are in level 1 of a bullish correction. For a convincing upward trend.

The DAX has recovered above its shorter-term moving averages, and the latest technical assessment indicates that the index is attempting to build a base above the 25,300 where most averages are bundled. This supports the view that buyers are regaining control following the early-October sell-off. Nevertheless, the market remains within a broader corrective structure, and the levels around 25,500–25,600 is likely to determine the next directional move, being a point of previous high volume.

The immediate support zone is 25,500. Holding above this area would preserve the short-term recovery and leave the market positioned to challenge 25,800 again, as it did 2 times already. A sustained four-hour close above 25,600 would provide stronger confirmation of bullish momentum and open the way toward 25,800.

Conversely, a failure to hold above 25,300 would weaken the four-hour structure and bring 25,100 into focus. A break below 25,100 would increase the risk of a deeper retracement toward 24,880.

The key distinction is that the daily chart suggests a potential bottom is forming, while the four-hour chart must still confirm that buyers can sustain the recovery.

Global Sentiment: Technology Weakness Remains a Headwind

Global equity sentiment has improved from the recent technology-led sell-off, although the recovery remains uneven. US markets delivered a mixed performance on Thursday, with the Dow Jones and Russell 2000 outperforming while the Nasdaq remained under pressure from weakness in artificial intelligence, semiconductor and memory stocks. Asian markets subsequently recovered some ground, helping improve the backdrop for European equities.

The DAX may benefit from a broader recovery in global risk appetite, particularly if industrial and financial stocks continue to attract buying interest. However, renewed weakness in US technology shares could weigh on European sentiment, particularly if investors begin reducing exposure to equities more broadly.

The direction of bond yields, the dollar and crude prices will therefore remain important alongside the DAX’s own technical structure.

Trading Outlook: The 25,600 level Is the Key Test

The preferred bullish scenario is for the DAX to hold above 25,600 and subsequently break through 25,800. Such a move would strengthen the recovery and open the way toward 26,150, with further upside possible if global sentiment improves and buying pressure persists.

The alternative scenario is a rejection from these levels followed by a break below 25,300. That would weaken the four-hour structure and expose 25,100, followed by the more significant support zone around 24,880.

The overall bias is cautiously bullish while the DAX holds above 25,250–25,300. A sustained break above 25,600 would strengthen the recovery and put 25,800 in focus. A break below 25,300 would weaken the bullish case, while a decisive move beneath 24,880 would suggest that the correction remains unresolved.

For now, the market is attempting to establish a base. The next decisive move around 25,600 should provide a clearer indication of whether the DAX is ready to resume its broader uptrend or requires further consolidation.