DAX Recovery Faces Key Test as Energy Fears Ease temporarily

DAX 40 Market Brief: Geopolitical Relief Supports the Rebound, but the Technical Picture Remains Fragile

Monday, 12 October 2026 | Market Outlook

European equities mainly had a positive start to the week as falling oil prices and renewed hopes of an energy truce between Russia and Ukraine support risk sentiment. However, the improvement in sentiment comes with the existing unstable geopolitical backdrop, with new Houthi attacks on Saudi Arabia increasing the risk premium for shipping and potentially escalating a broader Middle Eastern conflict.

US President Donald Trump announced an immediate energy ceasefire between Russia and Ukraine, alongside a deal intended to increase Russian diesel supplies to international markets. The announcement helped push Brent crude lower, with prices trading around $103–105 per barrel. However, the proposed ceasefire remains unconfirmed by Moscow, and Russian strikes on Ukrainian energy infrastructure have reportedly continued. The market is therefore pricing in the possibility of improved energy supply rather than a confirmed de-escalation.  

At the same time, Trump’s consideration of joining Saudi strikes against Yemen’s Houthis introduces a countervailing risk. More attacks on Saudi infrastructure or shipping through the Strait of Hormuz can quickly reverse the decline in oil prices, reigniting inflation concerns and putting pressure on an already pressured European equities market. For the DAX, the direction of energy prices remains a crucial factor given the index’s exposure to industrial companies, exporters and energy-intensive manufacturing.

However for the time being, European equity futures point to a positive market open, but volatility may be seen later on. Across the ocean, trading conditions can remain relatively muted because of the US Columbus Day holiday and the Japanese market holiday. Later on in the week, attention will turn to Wednesday’s US CPI release and the start of the earnings season, with LVMH among the notable European companies reporting this week. US Bank stocks are also on this week.  

DAX 40 Technical Analysis: Recovery Attempt Meets Resistance

DAX - Daily Technical Analysis

 

The DAX enters the session attempting to stabilise after last week’s sharp sell-off pushed the index below the psychologically important 25,000 level. Early trading data places the index at around 25,200,with a technical assessment identifying this level as crucial.

Source: Tradingview: DAX - 1D Chart

On the daily chart, the outlook remains neutral to bearish. The index is still correcting from its August–September highs near 26,600 and remains below important medium-term moving averages. The 20-day moving average, around 25,350 in the latest technical assessment, is acting as nearby resistance, while the 100-day average near 25,450 represents a more substantial barrier. The DAX would need to recover these levels before a sustained bullish reversal becomes credible. Fir the time being, the market dynamic is weak.

DAX - 4 Hour Technical Analysis

Source: Tradingview: DAX - 4H Chart

The four-hour chart offers a more cyclical trading framework with waves of around 500 to 800 points being printed I the last month. Here, resistance lies around current levels of 25,200 (50-EMA), 25,350 (100-EMA) and 25,700 (200-EMA). A sustained break above the first 2 zone would strengthen the recovery and open the way toward 25,800. Conversely, failure to reclaim 25,500 could suggest that sellers remain in control and that the recent rebound is corrective rather than the beginning of a new upward trend.

On the downside, 25,180 (20-EMA) is the first important intraday support, followed by the broader 24,800–24,870 region (last cycle bottom). A decisive break below that support would expose 24,600-24,700, the next major downside reference (July lows).

However important technicals are, the fundamental impulses could determine which scenario plays out. Falling oil prices and a sustained improvement in geopolitical sentiment would favour a recovery toward 25,500–25,620. However, renewed attacks in the Gulf, a reversal in crude prices to the upside or disappointing US inflation data could decrease risk appetite and push the DAX back toward its lows.

My View

My view: The DAX has room to rebound, but the technical evidence does not yet justify an outright bullish stance. The 25,500–25,620 zone is the critical resistance area. A sustained break above it would improve the short-term outlook, while rejection followed by a break below 25,180 would favour renewed downside pressure. Until one of these levels gives way, the technical assessment shows neutral to bearish biases, with geopolitical developments probably dictating the weeks direction.

Stay informed,

Philip Papageorgiou

By Philip J Papageorgiou - Head of Investment Research

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