Daily Chart: Longer-Term Bias: Neutral

4-Hour Chart: Short-Term Outlook: Bearish

Monday 26th October

The daily chart has a neutral longer-term bias, with the DAX caught between its key moving averages after a failed recovery attempt. Price is at 25,131, below the 14-day SMA (red) at 25,298 and the 50-day SMA (yellow) at 25,626, but still above the 200-day SMA (green) at 24,887. When price sits between the medium-term and long-term averages, the market is usually transitioning: the intermediate trend has weakened, but the long-term uptrend has not yet broken. The broader picture shows a double top at 26,550–26,620, formed by the mid-August and early-September highs. That pattern triggered the decline into early October, and the 200-day average then held twice near 24,800–24,850, creating a double bottom and a clearly defined support floor. The rebound from that floor was driven by a bullish divergence on the Stochastic Momentum Index (SMI), which measures where the close sits relative to the midpoint of the recent high-low range. Price retested the 24,800 area, but the SMI made a higher low (around -30, against -50 earlier in October and -75 in September). That showed selling pressure fading before the turn higher. The recovery has now stalled. Last week’s high near 25,700 was rejected right at the declining 50-day average, which is acting as dynamic resistance. Friday’s 0.96% drop to 25,131 pushed price back below the 14-day average. The SMI has rolled over at +38 without reaching overbought territory, and the blue line (24.62) has crossed below the orange signal line (30.41). That bearish crossover, together with a momentum peak far below the August high near +85, shows that the bullish divergence has run its course and that buyers lack the strength to reclaim the 50-day average. The result is a 24,800–25,700 trading range in which the 200-day average at 24,890 is the decisive level. Traders can look to buy a test of 24,890, targeting 25,300 and then 25,630, with a stop loss below 24,750, under the October double bottom. A daily close below 24,750 would turn the bias bearish, with targets at 24,600, the July swing low, and then 24,000, the June low.

The 4-hour chart has a bearish short-term outlook, as price has broken below a tight cluster of moving averages. The 14-period SMA (red) at 25,362, the 50-period SMA (yellow) at 25,362 and the 200-period SMA (green) at 25,385 have converged within 23 points. A compressed ribbon like this reflects a market with no trend that has been storing energy, and the break lower from it often marks the direction of the next volatility expansion. Price is at 25,131, now below all three averages. The 200-period average has been declining since its September peak, so the structure is slightly bearish, and the converged cluster at 25,360–25,385 now forms a strong resistance zone. Within October, the 4-hour chart shows lower highs at 25,700 and then about 25,650. On both peaks, the SMI made matching lower highs, near +75 and then +60, so momentum confirmed the weakening price action. The SMI is now at -65.03, below its signal line at -58.74, and is heading toward the -75 oversold zone where October’s bounces began. The latest dip to 25,010 has no bullish divergence: compared with the early-October low at 24,800, both price and momentum are at higher lows, so there is no sign yet that downside momentum is fading. That supports selling rallies rather than buying the dip. Traders can look to sell bounces into the 25,360–25,385 moving-average cluster, targeting 25,010 first and then 24,800, the October double bottom that lines up with the daily 200-day average. A stop loss should sit above 25,480, beyond the cluster. A 4-hour close back above that level would show that the breakdown has failed and expose the 25,700 range high. If price reaches 24,800–24,890 and the SMI forms a higher low there, that would be the signal to cover shorts, in line with the daily range-support setup.