The DAX index has surrendered most of the gains in the session but remains up by 0.71% as European bourses lost the initial risk-sensitive momentum. The DAX was hit hard by the slump in manufacturing PMI data. After the Eurozone’s flash manufacturing PMI hit a 22-month low, the DAX index lost 1.76% on Thursday.
It recovered those losses on Friday but gave these up on Monday after failing to break a critical resistance. The data now point to a sharp drop in the Eurozone GDP, which could pose a challenge for the European Central Bank as it juggles between containing inflation with interest rate hikes while trying to stave off an impending recession.
For the DAX, the intraday decline came off a rejection of the uptick at the 13383.25 resistance mark, enabling the bears to recover lost ground. The DAX is 93.12 points higher as of writing.
DAX Index Forecast
The break of the double top’s neckline at 12283.25 confirmed the pattern, with a measured move set to find completion at the 12351.82 support level (25 September 2020 and 6 November 2020 low). However, there has been a bounce on one of the intervening support levels at 12903.81 (24 June 2022 low). This bounce attempted a return move above the neckline.
However, it was soundly rejected at that level that now acts as a resistance via role reversal. The downtrend resumption must take out the support at 12903.81 and the 12625.63 pivot for the measured move to be attained. On the other hand, a break above the 13382.25 resistance makes the 13652.93 barrier available as a new target.
Above this level, additional targets are seen at the 14128.43 resistance, the 14401.24 barrier (8 March and 9 June 2021 highs) and the 14600.24 resistance (21 April and 30 May 2022 highs). If the advance continues above 14806.35 (18 March 2021 and 19 March 2022 highs), the pattern is invalidated.
DAX: Daily Chart
