Index in focus: DAX (Germany 40) poised for a potential breakout

Key takeaways

• Germany’s DAX index is still consolidating in a tight range between 15,300 and 15,600 despite weakness in other major indices.
• A confirmed breakout above 15,600 would expose 16,000 and/or the record highs at 16,300.
• Meanwhile, a bearish break could still find support near the 40-day EMA around 15,000.

Major US indices fell sharply last week on fears of “higher for longer” interest rates from the Federal Reserve, but that concern isn’t having as big of an impact across the Atlantic.

Looking at Germany’s DAX index (Germany 40), prices are still holding up well within a tight “high base” formation between 15,300 and 15,600. The index fell from the top of that range back toward the bottom on Friday, but prices are bouncing back strongly today, keeping the broader bullish structure intact.

With both the 50- and 200-day EMA trending higher, the medium-term trend is pointing to the topside. Therefore, a confirmed bullish breakout above 15,600 could quickly expose the psychological round number at 16,000, followed by the index’s record high around 16,300 after that.

Meanwhile, a bearish breakdown could point to a correction toward moving average support, with the 50-day EMA at 15,000 and the 200-day EMA in the 14,200 area providing logical support zones.

Source: TradingView, StoneX

Turning our attention to the economic calendar, Thursday’s flash CPI estimate for February will be this week’s key event to watch. With economists’ expectations centered around a decline to 8.3% y/y after last month’s 8.6% reading, a cooler-than-expected reading could provide the impetus for a bullish breakout.

Meanwhile, a higher-than-expected inflation reading could provide a headwind for the index on fears of higher interest rates from the ECB.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter @MWellerFX

Key takeaways

• Germany’s DAX index is still consolidating in a tight range between 15,300 and 15,600 despite weakness in other major indices.
• A confirmed breakout above 15,600 would expose 16,000 and/or the record highs at 16,300.
• Meanwhile, a bearish break could still find support near the 40-day EMA around 15,000.

Major US indices fell sharply last week on fears of “higher for longer” interest rates from the Federal Reserve, but that concern isn’t having as big of an impact across the Atlantic.

Looking at Germany’s DAX index (Germany 40), prices are still holding up well within a tight “high base” formation between 15,300 and 15,600. The index fell from the top of that range back toward the bottom on Friday, but prices are bouncing back strongly today, keeping the broader bullish structure intact.

With both the 50- and 200-day EMA trending higher, the medium-term trend is pointing to the topside. Therefore, a confirmed bullish breakout above 15,600 could quickly expose the psychological round number at 16,000, followed by the index’s record high around 16,300 after that.

Meanwhile, a bearish breakdown could point to a correction toward moving average support, with the 50-day EMA at 15,000 and the 200-day EMA in the 14,200 area providing logical support zones.

Source: TradingView, StoneX

Turning our attention to the economic calendar, Thursday’s flash CPI estimate for February will be this week’s key event to watch. With economists’ expectations centered around a decline to 8.3% y/y after last month’s 8.6% reading, a cooler-than-expected reading could provide the impetus for a bullish breakout.

Meanwhile, a higher-than-expected inflation reading could provide a headwind for the index on fears of higher interest rates from the ECB.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter @MWellerFX

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