Germany’s DAX index is once again squaring up to the 15,800 resistance. And if history is anything to go by, the DAX 30 may soon make a new all-time high.
The DAX Index is trading at 15,865, higher by just over 100 points (0.67%).
The German benchmark stock index is recovering from last week’s disappointing second-quarter GDP data and attempting to turn higher.
On Friday, the Federal Statistics Office revealed that Gross Domestic Product rose by 1.5% in the previous three months, short of the consensus 2% estimate. This follows a revision to Q1 from -1.86% to -2.1%.
Although, analysts have attributed the slow economic progress to supply chain issues, including the ongoing semi-conductor shortage and the recent blockage at the Suez canal.
Considering this, the DAX index has held up well, and last week’s strong half-year results from Deutsche bank has offered a glimmer of hope that the economy may improve in the second half.
Looking at the daily chart, a clear uptrend has dominated the price action in 2021.
During July’s sharp correction, the DAX reversed from the lower end of the channel at 15,040 and went on to gain just over 4%.
This has lifted the index above the 200-day moving average at 15,379. Furthermore, this morning, the price is advancing beyond the 100-day at 15,593.
This may be setting up for a test of July’s 15,814.70 ATH.
Coincidentally, the price action was incredibly similar earlier this year as the DAX index wrestled with the 14,200 level. Eventually, the market broke free from its broad horizontal trading channel and roared higher.
This leads me to believe we may be in for a repeat. On that basis, should the DAX close above 15,815, we should see an extension higher into previously unknown territory.
Of course, obvious risks are going forward, including the Delta COVID variant. And on that basis, should the price drop below the rising trend line support at 15,220, it will invalidate the bullish call.
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