Key Market Movements on the German DAX

Recently, we've seen a strong upward movement with the Pro Trading System indicating a buy signal at around 18,575, resulting in a significant rise of a few hundred points. The DAX is now approaching a critical area near the 18,935 mark, which represents an all-time high. This is a key level to watch.

When markets reach new highs, it's essential to ensure momentum indicators are also hitting new peaks. While this was true in previous movements, we're currently seeing a divergence with the momentum indicators. The angle of this divergence is quite steep at 45 degrees—a notable signal for potential reversals.

We have a target of 19,275 according to the Pro Trading System, and it’s possible we could reach this level. However, if we move above this target, it could be a warning sign of a potential downturn. While we've benefited from long trades across various markets, including the NASDAQ and Dow, the current sentiment suggests caution, especially with the DAX.

The daily buy signal at 17,800 has been highly profitable, with over 1,000 points gained. However, the weekly chart presents a divergence that could either be an opportunity or a warning. Having traded divergences for many years, this extreme divergence is a red flag.

This situation presents both risk and opportunity. It’s crucial to stay vigilant and monitor the Pro Trading System on smaller timeframes for any shift to red, signalling the start of a significant move.

Stay sharp, and we'll keep you updated with any further developments.

Best regards,

Lee Sandford

Founder, Trading College