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Will the DAX Break Through Its Resistance? Evaluating the Market's Next Move
DAX fell to 25,465 on July 7, snapping a five-day winning streak as tech sector fears with jumped oil prices from Middle East tensions weighed on the index. While chip and industrial stocks struggled, gains in companies like Beiersdorf and SAP were not enough to prevent the overall decline.
INDICATORS TO WATCH AS KEY DRIVERS TO MOVEMENTS:
ECB President Legarde Speech
German Industrial Production MoM May
Germany 15—Year Bund/g Auction
Germany 5-Year Bolb/g Auction
Euro Area Eurogroup Meeting Thursday
Germany Balance of Trade, Exports and Imports MoM May
ECB Monetary Policy Meeting Accounts
Germany Inflation Rate
Euro Area ECOFIN Meeting
EARNINGS SEASON EUROPEAN MARKETS SHOULD ALSO WATCH
Earnings performance for European firms facing rivalry from China.
Energy price shocks affecting the entire supply chain and the manufacturing/industry sector.
AI adoption and potential cost savings (CapEx)
TECHNICALS
Source: ACY
The DAX (GER30) is currently holding at 25,410.17. We can see the index has been testing overhead supply, with two key resistance levels clearly marked on the chart:
- Resistance 1: Located at 25,742
- Resistance 2: A stronger ceiling situated at 25,914
- Support 25,283
- Bollinger Bands with the price is currently trading within the bands, maintaining a steady posture. We have a clear support level at 25,107 if market volatility persists and we see a pullback, this is the first major floor to monitor.
- Target Region: If that 25,107 support level is breached, the charts suggest the next target price region sits down around 24,824.
- Relative Strength Index is currently at 57.53, showing a neutral to slightly bullish sentiment it's comfortably away from overbought territory, giving us a bit of room to move.
- MACD indicator shows the blue signal line still above the orange average line, with the histogram bars remaining in positive territory as confirming that the present trend has some underlying support.
To summarize this we are at a critical technical crossroads near key resistance requiring a decisive move to confirm next directional bias.
Drivers for the Week
Earnings Reports: Upcoming profit reports from tech and semiconductor companies are critical for sustaining the market's upward move.
Economic Indicators: Markets will watch German and U.S. economic data closely, as signs of cooling inflation could increase hopes for lower interest rates.
Investor Sentiment: Falling oil prices and Germany’s new budget plan for higher defense and infrastructure spending are boosting market confidence.
Risks: With probability of headwinds include investors locking in profits, Middle East tensions, or weaker-than-expected corporate earnings.
This month of July as DAX (GER30) skyrocketed to record highs. The index struggled mid-year due to sluggish manufacturing and energy inflation before recovering as positive economic data eased concerns regarding Federal Reserve rate hikes.
H1 2026 Key Drivers
Geopolitics and Energy: Investor sentiment was primarily driven by spring energy market volatility resulting from supply chain disruptions near the Strait of Hormuz.
Fiscal Stimulus as German government’s €500bn Sondervermögen investment program has remained a central theme. While the required debt issuance pressured bond yields, the market is increasingly baking in the long-term potential of this modernization effort, particularly for the defense and infrastructure sectors.
Sector Highlights
Defense -Boosted defense budgets have made companies like Rheinmetall top performers.
Technology/AI- Firm SAP continues to benefit from its strategic investment in artificial intelligence.
Pharmaceuticals- A volatile landscape for stocks like Bayer began to stabilize as positive developments in ongoing legal proceedings triggered significant rebounds.
Monetary Policy: Throughout the first half of the year, the market remained hyper-focused on the European Central Bank’s trajectory, weighing the impact of elevated financing costs on Germany’s heavy industrial base against a different, more fluid narrative surrounding U.S. monetary policy.
Heading into the second half of the year, sentiment remains guardedly optimistic indicating that the potential for a sustained next leg higher in the DAX is contingent on three critical factors:
Earnings Validation With current valuations trading at a premium to historical norms, the market is shifting its focus to tangible earnings growth to justify existing price levels.
Stimulus Implementation Investor attention is turning toward the tangible execution of government industrial reforms.
The German index remains vulnerable to market sentiment and in particular to the U.S. inflation print, which is crucial to sustain its present upward trend.
Disclaimer: This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
