Chart of the day

Where do we stand fundamentally?

Despite Germany's economy contracting for the second year in 2024, the DAX hit record highs, showcasing a significant divergence between the German stock market performance and the broader economic indicators. This is attributed to the DAX's composition, where sectors like manufacturing, software, and technology, which are heavily represented, have performed well despite the economic contraction.

The DAX is testing 21450, which is now acting as strong upside resistance for an extension of the third wave higher. This is strong near-term resistance for an upside continuation, and we need to see a breakout higher for an extension to 22000. A break below 21000 can invalidate a third long-term wave extension higher.

We are in a possible terminal phase of an uptrend third long-term wave with indicated resistance 21450. A breakout above 21450 will lead to an extension higher in the prolonged third wave and a rejection here intraday and daily will lead to a reversal in the fourth wave pullback.

_{You can take a near-term short-trade entry with an SL above 22100 to target 19000 and lower.}