The German DAX index has moved back towards the upper end of its trading range, meaning the 15,500 to 16,000 regions, after the recent downward moving towards the 14,900 to 15,400 range quick ran out of buying.
Interestingly, DAX traders have totally swept aside terrible IFO data from the German economy. The currency market did not take the IFO data so well, with the euro tumbling under the 1.1600 level on the news.
The Bundesbank’s also issued a worrisome growth outlook for the German economy, which so far seems to be not weighing on the DAX. Bundesbank said that the full-year growth in 2021 was likely to be significantly lower than the June forecast of 3.7% due to persistent supply chain issues and the loss of momentum in the service sector’s business activity.
Back to the IFO survey, the headline Business Climate Index of the IFO Survey for Germany declined to 97.7 in October from 98.9 in September. This reading fell short of the market expectation of 97.9. Additionally, the Expectations Index fell to 95.4 from 97.4. Meanwhile,
Still, the tape remains bullish for the DAX, and a large bullish pattern has been activated on the lower time frames, which strongly suggests that the German DAX index may be headed back towards the 16,000 level.
Looking at the pattern more closely, a large falling expanding wedge pattern has formed between the 15,200 to 16,000 levels. These patterns are amongst the most explosive bullish reversal patterns out there.
Looking at sentiment data, retail traders are on the wrong side of the recent bounce back in the German DAX. The ActivTrader Market sentiment tool shows that GER30 traders are currently 65 percent bearish towards the index.
Retail traders tend to lean against the prevailing trend and have poor market timing. Therefore, rising bearish sentiment probably means the bull run in the GER30 will continue.
GER30 Short-Term Technical Analysis
The four-hour time frame shows that a large descending broadening wedge pattern has formed, which strongly suggest a bounce a huge rally could be coming for the German DAX.
This bullish reversal pattern suggests a final move toward the upper end of broadening wedge pattern around the 16,000 level, before we get the wedge breakout target of 17,200 area.
GER30 Medium-Term Technical Analysis
The daily time frame shows that the German DAX has formed a large, inverted head and shoulders pattern, and the neckline is currently located around the 15,000-resistance level. The pattern has a massive target of 3,500 points.
According to the Ichimoku indicator the bullish medium-term case is in play while the Ger30 trades above the 14,900 level. The 17,000 level remains the obvious bullish target if support holds.