Current Status (Estimated): ~23,800 - 24,100 points (near the highs, but with declining momentum).
Summary Verdict: Index "Stretched." Ascent driven by global inertia (S&P 500), but hindered by poor domestic fundamentals.
Macro Divergence: The German economy is in a technical recession (manufacturing stalled), but the index is at its highs. This is a divergence that will eventually close (either the economy improves, or the index falls).
The Weight of the Euro: With the Fed cutting rates and the ECB holding steady, the Euro is strengthening (EUR/USD towards 1.16+). A strong Euro is poison for the DAX, which is composed of large exporters (BMW, Siemens, BASF) that earn in Dollars and convert to Euros.
Poor R:R (Risk:Reward): Buying now at the highs offers limited upside potential (the "ceiling" is near) compared to the risk of a correction (the "floor" is far away, towards 23,000).
2. Future Scenarios (What to expect)
Given the mix of American euphoria (which is pulling everything up) and German depression, here are the two most likely scenarios for the coming weeks.
SCENARIO A: The "Bull Trap" (Probability 55%) - TACTICAL SHORT
The Dynamics: The DAX tries to follow the S&P 500 towards new all-time highs (area 24,500 - 24,600) in the wake of optimism for the Fed rate cut on December 10th.
The Trigger: It arrives in that area with low volumes and diverging indicators (RSI H4 decreasing while the price rises).
The Outcome: False breakout (Bull Trap) and rapid rotation downwards as soon as investors realize that the Euro at 1.17 kills Q4 earnings of German companies.
Target: Return towards the key support at 23,000 / 22,950.
SCENARIO B: Lateral "Grind" (Probability 35%) - NO TRADE
The Dynamics: The S&P 500 rises, but the DAX cannot follow it. It remains stuck in a narrow range (23,800 - 24,200).
The Reason: Money flows out of Europe (low growth) to the USA (AI boom + falling rates) or Asia.
Trading: This is the worst scenario for a trader ("meat grinder"). You waste time and pay swaps.
Here are the two setups (one Long, one Short) that might make sense:
🔵 LONG SETUP (Only on collapse)
Where: Area 22,950 - 23,050.
Why: If the price collapses there, it is a technical buying opportunity (technical rebound) regardless of the macro.
Stop Loss: 22,800.
🔴 SHORT SETUP (The preferred one)
Where: Area 24,450 - 24,600 (Double Top / ATH).
Why: Short the extreme resistance with a strong Euro.
Stop Loss: 24,750 (Tight, above the highs).
Target: 23,500.
Logic: Bet on the fact that the real German economy will end up weighing on valuations.
Disclaimer!!! The content of this article is for informational, educational, and entertainment purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell securities, cryptocurrencies, or other financial instruments. The author is not a professional financial advisor. Investing in the financial markets involves high risks, including the possible loss of all capital. Before making any investment decisions, you are strongly advised to do your own research (DYOR) and, if necessary, consult a qualified professional. The author assumes no liability for any loss or damage arising from the use of the information contained in this article.
Summary Verdict: Index "Stretched." Ascent driven by global inertia (S&P 500), but hindered by poor domestic fundamentals.
Macro Divergence: The German economy is in a technical recession (manufacturing stalled), but the index is at its highs. This is a divergence that will eventually close (either the economy improves, or the index falls).
The Weight of the Euro: With the Fed cutting rates and the ECB holding steady, the Euro is strengthening (EUR/USD towards 1.16+). A strong Euro is poison for the DAX, which is composed of large exporters (BMW, Siemens, BASF) that earn in Dollars and convert to Euros.
Poor R:R (Risk:Reward): Buying now at the highs offers limited upside potential (the "ceiling" is near) compared to the risk of a correction (the "floor" is far away, towards 23,000).
2. Future Scenarios (What to expect)
Given the mix of American euphoria (which is pulling everything up) and German depression, here are the two most likely scenarios for the coming weeks.
SCENARIO A: The "Bull Trap" (Probability 55%) - TACTICAL SHORT
The Dynamics: The DAX tries to follow the S&P 500 towards new all-time highs (area 24,500 - 24,600) in the wake of optimism for the Fed rate cut on December 10th.
The Trigger: It arrives in that area with low volumes and diverging indicators (RSI H4 decreasing while the price rises).
The Outcome: False breakout (Bull Trap) and rapid rotation downwards as soon as investors realize that the Euro at 1.17 kills Q4 earnings of German companies.
Target: Return towards the key support at 23,000 / 22,950.
SCENARIO B: Lateral "Grind" (Probability 35%) - NO TRADE
The Dynamics: The S&P 500 rises, but the DAX cannot follow it. It remains stuck in a narrow range (23,800 - 24,200).
The Reason: Money flows out of Europe (low growth) to the USA (AI boom + falling rates) or Asia.
Trading: This is the worst scenario for a trader ("meat grinder"). You waste time and pay swaps.
Here are the two setups (one Long, one Short) that might make sense:
🔵 LONG SETUP (Only on collapse)
Where: Area 22,950 - 23,050.
Why: If the price collapses there, it is a technical buying opportunity (technical rebound) regardless of the macro.
Stop Loss: 22,800.
🔴 SHORT SETUP (The preferred one)
Where: Area 24,450 - 24,600 (Double Top / ATH).
Why: Short the extreme resistance with a strong Euro.
Stop Loss: 24,750 (Tight, above the highs).
Target: 23,500.
Logic: Bet on the fact that the real German economy will end up weighing on valuations.
Disclaimer!!! The content of this article is for informational, educational, and entertainment purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell securities, cryptocurrencies, or other financial instruments. The author is not a professional financial advisor. Investing in the financial markets involves high risks, including the possible loss of all capital. Before making any investment decisions, you are strongly advised to do your own research (DYOR) and, if necessary, consult a qualified professional. The author assumes no liability for any loss or damage arising from the use of the information contained in this article.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.