DAX 40 Index Closes Above 20,000 for the First Time
On 24 October, we noted that the DAX 40 stock index (Germany 40 mini on FXOpen) was losing bullish momentum and could break downward from the Bearish Rising Wedge pattern (marked with black lines).
Since then, as indicated by the orange arrow on the DAX 40 chart:
The price dropped below the pattern.
It found support at the psychological level of 19,000, which had previously acted as resistance (marked by arrows).
The price then rose to a historic high, breaking the 20,000 level.
Interestingly, the index has risen despite media reports stating:
The IFO Business Climate Index has fallen for the fifth consecutive month.
The German Services PMI has remained below 50.0. New data released today confirms that economic weakness is spreading beyond the manufacturing sector.
The bullish sentiment may be driven by the weakening euro, which makes German export-oriented companies more attractive to investors.
Today, the chart of the German stock index DAX 40 (Germany 40 mini on FXOpen) indicates that the stock market may be overbought:
The RSI indicator is at its highest level since May.
The price is near the upper boundary of the channel (marked with purple lines), constructed from key reversal points in autumn 2024.
Given these factors, it seems plausible that a correction could be forming under the current conditions. After the rally that started in late November, the DAX 40 index (Germany 40 mini on FXOpen) may decline towards the former resistance level of 19,700.
Read more: https://fxopen.com/blog/en/oa-dax-40-index-closes-above-20-000-for-the-first-time/
Text source: Forex Trading Blog
