Warning Signals on the DAX Horizon
A Swiss asset manager currently sees the DAX facing a potential strong setback and identifies four warning signals that could indicate the end of the recent rally. This assessment is particularly relevant for private investors and savers, as it points to an impending correction in the German stock market.
1. Trade Dispute as a Burdening Factor
The tariff deadline set by the U.S. on July 9 has created uncertainty. Higher tariffs could burden the markets, and new impulses are currently lacking, making a correction after the strong rise of the first half of the year (up about 20 percent) likely.
2. Technical Resistances
Although the DAX has reached a new record high, it rebounded at the upper line of its short-term upward trend channel as well as at an important rectangular border at around 24,660 points. This could be a false signal and trigger a soon setback.
3. Overbought Market Situation
The market situation is considered extremely overbought, which often leads to a longer consolidation due to seasonal effects in the summer slump.
4. Lack of Sustainable Impulses
In addition to the tariff issue, there are hardly any new positive news or data impulses from Germany or the USA that could support the upward trend.
From a technical analysis perspective, support zones are cited at about 23,000 to 23,100 points and around 22,200 points, while the resistance remains at the all-time high around 24,600. Therefore, the asset manager recommends caution: entering long positions should be well-considered; short trades could become interesting if the “buy the dip” behavior sustainably ends.
For private investors, this concretely means:
- Increased caution with further purchases of the DAX.
- Observation of the mentioned technical levels to assess possible price declines.
- Consideration of external factors such as trade disputes and macroeconomic data.
Overall, much suggests that the DAX is facing a correction after its strong rally phase – a scenario with risks but also opportunities for well-informed investors.