Back in October last year the German stock index DAX was flashing warning signs for the stock market as a whole (see Winter coming?). We paid attention and whoever was alongside, was able to protect the damage that could have occurred otherwise. However in the beginning of this year we flipped the table and started (cautiously) accumulating stocks again (see Is it over?).

In this post I’d like to present why I think the DAX is again one of the most important markets in the world to watch right now.

Let’s start with a weekly chart. In the bottom right corner is a zoomed in daily chart of the recent price action.

There are a few things I’d like to point out. The price is currently trading above 11,800, a very important level of interest historically. This level is

  • 161% Fibonacci extension level measured from 2000 (or 2008) peak and 2003 low.
  • The Oct ’18 breakdown level after an 18 months long H&S top formation.

There has just been so much over head supply below this level in Q418 and Q119, so I can’t stress enough how important it is for the price to be able to regain this level again. Should it stay above, it could be a very constructive sign for stock markets going forward. However, don’t underestimate the potential magnitude of a move lower should it fail to do so.

ChartingTrades.com is a blog of CT Capital Ltd.

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