the 13.795 level in DAX

It is August'22 now and lets us review the DAX on a monthly basis. First thing that is noteworthy, remains the strong 13.795 level. This is the high before the corona pandemic. In February and March that year the DAX fell ca 5.500 or 40%. But recovered quicklyafterwards. In December the same year prices marked a new high. Still closing above the line only happened March the following year.  

Pleas note, that the following is just speculation, as we try to understand what is going on in the heads of investors. We assume people invested in the DAX took the chance and got out of their positions with only a limited amout of loss, maybe. It then took a gap up to get over the 13.795 barrier. What followed looks like a distribution phase during summer '21. And even more institutional investors dropped out (with increasing volume). And end '21 inflation appeared at the horizon, and we all know what came next ... transitory ... ups ... we have to fight ... even when a recession ...

Anyway, total amout of assets held by the FED has not been reduced significantly. Yes, rates have been raised - but most of the damage was done by speaking. Not so in Europe - the ECB has not been that agressive and as a result the EUR is very, very weak. Good for exports (see germany), not so good for imports (energy). Back to the price action.

First 5 months closings were all above 13.795, but with dips below and decreasing volume. In June the index closed below and at the lower bollinger band. July was rebound, as a potential long-term support line held (again) and pushed prices back into the band.

So we assume this 13.800 level is now burned into the heads. That gives us two limits, one to the down-side and one to the up-side. Breaking above 13.795 could clear the path to further up-side, whereas falling below the trend-support at 12.620 might open potential to the 61,8% line.

This will be mostly driven by inflation and in particular energy prices in Europe and Germany.