DAX: Opportunity to Ride or Risk Ahead?

A complete medium-to-long-term analysis

The DAX has posted a +28.45% gain from the April 2025 lows, following President Trump’s announcement of new tariffs. This isn’t just a technical rebound—it’s a structural reversal. So the real question remains: Is this bullish trend here to stay?

Macro Scenario: What’s Really Driving Prices?

The current exodus of investors from U.S. assets—following the decline of “U.S. exceptionalism”—has shifted capital flows toward other regions, revealing a growing preference for Europe and China. Europe, in particular, is currently benefiting from a supportive macroeconomic backdrop: unemployment is at a low of 6.2%, and headline inflation has dropped below the ECB’s target to +1.9%, opening the door for a more accommodative monetary stance.

Additionally, expectations for a sharp increase in defense spending are on the rise, with NATO urging member states to strengthen their aerial capabilities.

The prospects of new economic stimulus, a dovish monetary policy, and a healthier macro backdrop are driving European equities to outperform the S&P 500.

Positioning and Flows: What Are Big Players Telling Us?

The sharp rise in European markets—especially the DAX—is currently fueled by strong inflows, particularly concentrated in the European equity segment.

According to Goldman Sachs data, flows into Europe surged from $965 million (as of May 28) to $8.276 billion in early June. On a 4-week Z-score basis, Europe is in overbought territory at +1.94, while the U.S. lags behind at –0.56, indicating that institutional investors are currently underweight U.S. equities.

TECHNICAL ANALYSIS – DAX (GER40) H8

The DAX has just completed a 5-wave impulsive structure, followed by a classic A–B–C correction, and has now begun a new bullish leg, with wave (1) already formed and wave (2) completed as a technical pullback.

Elliott Wave – A New Cycle in Progress

The previous rally concluded with a standard 5-wave impulse, peaking around 24,000 points (wave 5), marking the cycle’s top. From that high, the market entered a well-structured A–B–C correction, with prices retreating to the 24,100–23,450 zone—also a high-volume monthly area (HvA monthly).

This correction set the stage for a potential new impulse cycle. Wave (1) of this new cycle appears to be complete, confirmed by a strong breakout followed by a classic pullback that respected typical retracement patterns of early trend stages.

If confirmed, we are now on the verge of wave (3)—typically the most explosive part of the cycle. Its launch could push the DAX toward new relative highs, with potential targets in the 24,800–25,000 area in the upcoming swings.

Volume Profile – Solid Base Rebuilding

The volume profile reveals a pronounced high-volume area (HVA) between 23,600 and 23,450 points, where the market fully absorbed wave (2), consolidating effectively and building a strong structural support zone.

After this accumulation phase, prices moved back above the 24,000–24,200 congestion area. Notably, volumes thin out significantly above this range, paving the way for a potential extension to 24,600 with less technical friction.

The mix of well-defined HVAs and low-volume (LVN) areas suggests the market has rebuilt a solid foundation, supporting the hypothesis of a renewed impulse rally, in line with the Elliott Wave structure.

Oscillators – Strengthening Momentum

Momentum indicators are aligning with a bullish continuation. The Stochastic just triggered a bullish crossover—an early signal of a new directional leg.

The RSI also confirms this outlook: it’s back above the 50 level, with an upward slope heading toward overbought territory (70). This behaviour supports the idea of growing positive momentum, consistent with the Elliott reading and volume structure.

Possible Scenarios – Key Levels Approaching

The current technical setup opens two distinct operational hypotheses, with clearly defined key levels that can confirm or invalidate the emerging scenario.

Main Scenario: Wave (3) in Development

If the DAX can stabilize above 24,320–24,400, we may see the start of wave (3)—traditionally the strongest Elliott wave. In this case, the index could target 24,800 (first major resistance) and later aim for 25,300, a natural projection based on the 161.8% extension of wave (1).

Alternative Scenario: Correction Not Over

Still, we can’t entirely rule out that wave (2) isn’t complete. A drop back below 23,450 would be a sign of structural weakness, reopening the possibility of a broader or more complex correction, such as a Flat or WXY combination.

Conclusion

The DAX shows the classic technical signs of a new impulsive structure starting, with volume confirmation and strong participation in the recent recovery. The A–B–C correction is clearly defined, and the resilience of the high-volume zone supports the idea of a wave (2) bottom.

Trading bias: Bullish above 24.300, with potential targets up to 25.300 in the coming weeks.

Key Levels:

• Strong Support: 23,450–23,600
• Intermediate Resistances: 24,320 – 24,800 – 25,300

DAX Seasonality Analysis

Looking at DAX seasonality based on annual performance from 2020 to 2025 reveals a compelling dynamic: 2025 is shaping up as one of the strongest starts, with growth exceeding +20%. Such a powerful start hasn’t been seen since 2023, another strong year that ended up with +19.5%.
Even 2024, despite some sideways phases, showed solid performance around +18.5%.
2021 saw more modest but still positive gains, while 2020 was clearly impacted by the pandemic, with a sharp March crash and a recovery that ended the year barely positive.
In stark contrast, 2022 was the only clearly negative year, with –12.7% due to macro pressures from inflation and the Russia–Ukraine conflict.

Month-by-month seasonality shows that the first three months (January–March) tend to be stable or mildly bullish—except during crisis years like 2020 and 2022. From April onward, particularly April–May, history suggests one of the most favourable periods: in nearly all positive years, that’s when acceleration begins.

June through August are typically sideways or consolidative, consistent with the summer lull in European markets.
Still, 2023 and 2025 show that even in these months, constructive tone can persist.

September and October are often critical months, with frequent corrections or profit-taking—even in otherwise strong years. But it’s in the final months (November–December) that markets usually recover: in four out of the six years analysed, a “Christmas rally” took place, driving a strong year-end push or further gains.

Currently, 2025 is tracking closely to 2023, which could serve as a reliable model for future projections. If this analogy holds, we could see new all-time highs by year-end.

Final Note

DAX seasonality reveals consistent patterns: April–May and November–December are historically the best-performing periods.
Summer and early fall, on the other hand, tend to be more uncertain, marked by sideways or choppy action.
This insight can be highly valuable for planning multiday or swing trades in sync with the index’s cyclical structure.