DAX 30 Technical Outlook: Breakout Has 400 Point Potential

[Redator]

The DAX Index has continued to edge higher in the European session. Investors are keeping an eye on economic data, company earnings, and global events, as Presidents Trump and Putin are set to meet tomorrow.

Optimism is also growing with expectations that the Fed will cut interest rates by 25 basis points next month.

Euro Area GDP and Industrial Output

Euro zone industrial production fell more than expected in June, even though the economy grew steadily in the second quarter.

The data may raise doubts about the 20-nation currency union's ability to withstand the effects of a global trade war.

Industrial output dropped by 1.3% in June, mainly due to a sharp decline in Germany and weak consumer goods production, missing expectations of a 1.0% fall, according to Eurostat data on Thursday. Adding to the disappointment, Eurostat revised May's output growth down to 1.1% from 1.7%, showing the trend is weaker than expected.

Meanwhile, GDP grew by 0.1% in the second quarter, matching earlier estimates, and employment also rose by 0.1%, as predicted, but this was slower than the 0.2% growth in the previous quarter.

Recent positive data, like purchasing managers' indexes (PMI) and the European Commission's sentiment report, suggested that consumer spending was helping the euro zone handle trade tensions. However, newer figures, such as industrial orders and a key sentiment report from Germany, have cast doubt on this optimism.

Despite this, investors remain hopeful for a slight recovery, supported by the recent EU trade deal with the U.S., which brings more stability, and Germany's plans to significantly increase government spending to boost growth.

Despite the data the DAX continued its advance today as market participants appear to have shrugged off any concerns. Among individual shares, top gainers include Airbus SE, Vonovia SE and Rheinmetall AG with gains of 1.7%, 3.23% and 2.16% respectively.

Technical Analysis - DAX Index

From a technical standpoint, Looking at the daily chart below and we seem to be trading in a bear flag pattern at the moment.

In theory, such a pattern is a precursor for a bullish breakout but the top end of the pattern rests some 140 points away.

The period-14 RSI has bounced off the 50 level indicating some bullish momentum for the index moving forward.

DAX (Germany 30) Daily Chart, August 14, 2025

Source: TradingView (click to enlarge)

Now dropping down to a two-hour chart and we have broken out of what appears to be a bull flag/triangle pattern.

Measuring the mouth of the pattern market participants could plot a potential target around 400 points away.

However, the daily chart above will bring some stern resistance between 100 -150 pints away from current price.

In theory an initial move higher could still bring gains of around 100-150 points, while a break above the bull flag on the daily, coil lead to a retest of the all-time highs at 24650

DAX (Germany 30) Two-Hour (H2), August 14, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - DAX Index (GER30)

Looking at OANDA client sentiment data and market participants are Short on the DAX with 71% of traders net-short. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-short suggests that the DAX Index prices could continue to rise in the near-term.

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