DAX 40 trading idea: the beginning of a new fall

DAX 40 could return to year lows in the coming weeks.

From a technical standpoint, the outlook for the DAX 40 has been bearish since last week after a sharp pullback below the last few weeks’ support at 14,190. This drop marks the beginning of a potential new leg of decline that could extend to October’s low of 12,000, if not longer, if the economic outlook deteriorates significantly.

However, intermediate support levels should be watched, such as the mid-September peak at 13,570, then the March and July lows at 12,500. This bearish forecast would technically be invalidated in the event of a sharp rebound above 14,190.

Entry: Selling below 14,000 points

Stop: 14,300 points

Goal: 12,000 points

Risk/reward ratio: >3

Follow the price of DAX 40 with IG.

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