DAX 40 & DOW JONES: Weekly analysis 28th August – 1st Semptember

<h2>Market movers</h2>
<p>Powell’s speech in Jackson Hole reaffirmed that the fight against inflation is not over. In the meanwhile the S&amp;P rating agency downgraded 5 American banks, Nvidia managed to beat all expectations and the BRICS admitted six new members that could potentially reshape the world order. Amidst all of this turmoil, the markets still fail to draw vertically in order to complete the ongoing correction.</p>
<p>The US 10-year treasury yield reached a 16-year high. July inflation figures exceeded expectations, paired with a solid NFP report and aggressive July FOMC minutes. All these factors together compelled the markets to consider the possibility of an additional rate hike by the Federal Reserve.</p>
<p>The upcoming week will be interesting for the macroeconomic and corporate data.</p>
<p>The highlight of the week is the Non-farm Payroll report which will be released on Friday afternoon. July’s data set came in at 187.000 new jobs created but falling below expectations and posting the slowest growth since 2020. The June report was also revised downwardly at 185k, suggesting that job growth is slowing, although wage growth remains robust. Another month of weaker job growth could support the view that the Fed’s rate hikes are starting to slow the economy.</p>
<p>On Tuesday, we will evaluate the US consumer confidence report, which is crucial for gauging the strength of the US economy.</p>
<p>An exciting data set will be released on Wednesday and Thursday: inflation figures in Europe and Germany. Given the notable contraction in the German economy, a weaker inflation could cast doubts on an ECB rate hike in September. Furthermore, we will evaluate the ADP and quarterly GDP data in the US.</p>
<p>On Thursday in the US, we will have the PCE Core data, which is the Fed’s preferred measure to gauge inflation. If the data indicate sluggish growth, it could have an impact on the dollar, potentially leading to a significant decline.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>It has been since the end of April 2023 that we didn’t witness 2 consecutive weeks of decline on the Dow Jones. While the US stock exchange decline hasn’t fully materialized in the medium term, there might be an opportunity for a potential upward rebound in the short term, particularly based on the closing posted on Friday.</p>
<p>From the lows of the week of March 13, the rise of the international stock markets has been incredible. The thesis that supported a lead to a very strong climb until August 4th, the annual setup, was confirmed with almost millimeter precision. Everything occurred as we predicted, and between September 2022 and March 2023, all international markets posted their lows for the moment (which could also be the ten-year lows).</p>
<p>The bearish swing observed last week could lead to a drawdown of at least 7/10% from the pre-crisis peak. Currently, the trajectory appears to align with the previously mentioned scenario, and it is crucial to closely monitor its evolution. The upcoming key dates are at the end of the month, and it will be important to observe whether we will reach the monthly low next week.</p>
<p>Beyond the rhetoric of the debt ceiling, the recession, and the banking crisis, only a decisive flip in sentiment could lead to a trend reversal. Earnings of US mega caps have shown off and many other companies are also ramping up the increase in revenue.</p>
<p>The average annual returns on international equities (World Stock Exchanges based on GDP) are around 11%. Current rates in America are more than 5%. With a projection for 10, 15, and 20 years, equity markets always beat bond markets. Therefore, we should be at the starting point of a 10-year bull market.</p>
<p>Rising interest rates won’t directly and inevitably lead to a recession. As long as these hikes are balanced with economic growth, there should be no danger. On the other hand, an exaggerated rate cut could drag down the markets for a long time.</p>
<p>The likely lows in October 2022 will have a high probability of remaining so for many years. They could represent the lows of the entire decade. Despite some short-term overbought, the markets are unstoppable and will be so for a long time. Here is why.</p>
<p>We have highlighted several times that stock prices tend to move at least 6/9 months before the economic cycle. For this reason, during the final part of 2022, the markets would have posted a significant bottom between June and October and then taken off again for the long term. The prices marked during the year had discounted the most unfavourable geopolitical and geo-economic conditions.</p>
<p>During 2023, we expect the following pattern to emerge: the low should be posted in January or during Q1 2023, and the high during Q4. Average market returns up to 20-25%.</p>
<p>As always, we will confirm the annual forecast from time to time.</p>
<p>Last week, the S&amp;P 500 posted a sharp decline after testing resistance at 4473-4491 and closing Friday in the 4413 area. Nvidia’s quarterly earnings triggered a notable rebound, but concerns of a “hawkish” Powell brought a collapse in prices in the last two sessions of the week.</p>
<p>New supports in area 4409-4398-4387. Supports 4370-4355 confirmed, which becomes weekly. Below it, downward accelerations are possible, with the first target in the 4304 mark and filling the gap of mid-June. Confirmed the 4274-4263, and if these levels are to have trespassed, it will bring a downward acceleration toward 4249, then 4227-4223, the whole zone where volumes managed to concentrate for the upward lunge of end June.</p>
<p>Below 4223, there are high chances for further drawdowns targeting the supports at 4204 and 4196-4190. 4177-4170 is still a critical mark.</p>
<p>Confirmed the supports in 4153, 4144-4140, 4124-4117, and 4100 areas. The loss of the latter support could lead to heavy drawdowns</p>
<p>Confirmed the supports in 3930-3905-3899, 3945-3957-3961, 3979, 3993-4000, and 4032-4043 areas. The 4064-4075 areas remain a crucial support.</p>
<p>3890-3879 is still a critical zone because, in this specific area, buyers managed to concentrate. Additional support in 3864-3857 areas. Another intermediate zone is located in the 3822-3814 area.</p>
<p>Support in the 3808-3798 zone was confirmed, below which prices could start a new downward spiral.</p>
<p>Confirmed supports in 3669, 3680-3689-3701, 3711-3726-3733 areas.</p>
<p>3762 and 3711 are the monthly levels that support the current uptrend, so beware of any breakout of these levels: We could witness a new trend inversion.</p>
<p>The psychological support of 3600 remains crucial. The support at 3644-3651 has halted the fall and is now the monthly support after this solid uptrend. It shouldn’t be touched again, to avoid new and heavy downward movements. Below is the 3607 level. Then again, the 3557-3547, 3538-3524, and 3514-3507 are support levels. The 3485 support is now the annual, critical, and historical level for the S&amp;P500 index. We will monitor whether this last level could stop, at least in the medium term, the bearish direction of the markets. Should we go beyond it, 3200-3300 will be the target, sought after by funds, investors, and traders halfway around the world.</p>
<p>New resistances in 4414-4425 areas. A successful breakthrough of the aforementioned area could lead to a strong rebound with targets at 4455 and 4464. Above the resistance 4480 we could witness an attack on the 4491 and then the weekly resistance located in the 4508-4514-4520 area.</p>
<p>Confirmed intermediate resistances in areas 4525-4531 and 4535-4542. The key resistance in the 4550 area has been confirmed. Additional resistances in the 4564, 4575-4580 areas and the resistance that offers a new bullish strength in the 4595-4607 area. Confirmed resistances 4617-4622 and 4629-4632.</p>
<p>The upside targets are still 4662 and 4680. Important resistances could come into play from these two levels before new historical highs are reached.<br />
The weekly closure above 4613 guarantees the annual trend reversal if confirmed on a monthly basis; the following targets remain 4717 and 4780.</p>
<p>How to move?</p>
<p>On August 17, which was the setup date, it led to a significant low followed by a rebound. The next relevant dates, where turning points could occur, remain the 28th and 30th. Therefore, we expect the lows to be reached right at the end of the month. The subsequent developments will hinge on the magnitude of these lows. Unless we witness at least one price recovery above the weekly resistances during this week, we should continue to see further bearish pressure and flash crashes.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25264 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-76-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week, the German index moved somehow sideways, and Friday closed above the weekly support of 15596-439. If this support manages to hold a bounce or an accumulation phase during the week, we could witness a strong price rally to the upside.</p>
<p>New supports in areas 15704-656 and 15637-554. 15490-439 are confirmed. Followed by 15152-196, 15247-287 and 15308-368 (weekly). These zones represent the strength of the yearly bullish strength and must be maintained for the movement to continue.</p>
<p>Supports in areas 14957-14844 and 14737-603 are confirmed. This area becomes the yearly level for new upward movements or heavy drawdowns.</p>
<p>Confirmed intermediate supports 14138-184, 14342, 14414-545.</p>
<p>New critical zone in area 13814-781. The loss of the volumetric zone 14069-13974 opens the way to monthly support in the 13621 area.</p>
<p>Solid supports in areas 13692-608, 13550-516, and 13457-410. Supports 13314-333, 13331-410, 13438-467 confirmed.</p>
<p>Confirmed volumetric supports in areas 12865, 12833-12909, 12978-13038, 13113-178, 13222-280, 13307-357.</p>
<p>Confirmed the supports in area 12808-766. From 12628 to 12766, there are a series of intermediate supports, helpful for long entry from pullbacks. 12566 becomes monthly support.</p>
<p>Other key supports are 12407-517, for the concentration of volumes, and 12353-275, the first bullish turning zone. Confirmed support in areas 12223 and 12136.</p>
<p>It was also confirmed support in the 19920-15006 area. This is 11875-11950-12024, which halted the price fall after the US CPI data on October 13th. Losing it would mean new bearish pressures and a touch of the weekly support in the 11766 area; with extensions to 11650 and 11542 below it. The 11095 mark could be a target in case of a massive sell-off. These levels can be considered annual reversal points.</p>
<p>New resistances in the 15740-754 and 15785-874 areas. A breakthrough of these levels could initiate a vertical thrust aiming at the weekly resistance located in the 15983-16024 area as a target.</p>
<p>16054-104 confirmed. Breaking these levels could lead to a fast rebound up to the monthly resistance in the area 16225-253, where last Tuesday’s gap will be filled. Additional resistances in the 16272-335 area, the breaking of which can lead to the annual highs in the 16517-475 area.</p>
<p>If by the following Friday, prices remain above 16104, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 15674, the trend will move strongly downwards again.</p>
<p><img decoding="async" class="alignnone wp-image-25267 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-75-1-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – Last week, the index maintained its downward momentum, leading prices to touch and breach the support at 34142-076, before closing on Friday in the 34349 area.</p>
<p>New supports in area 334322-201 and 34159-059. Protecting these levels could result in a significant price rebound.</p>
<p>Additional support in areas 34000 and 33931-861, which become weekly.</p>
<p>Confirmed 33712-660 as monthly support and also 33559-434. The break of these zones could lead to bearish solid accelerations.</p>
<p>Other supports are placed in the area 33305, 33216-039, and 32975-858. Underneath, it will be possible to witness new bearish accelerations. Other supports in areas 32804 and 32725, are monthly supports.</p>
<p>Additional supports in the following areas: 32499-632, the loss of which could lead to monthly trend reversals. Following supports: 32801-875, 33945-990.</p>
<p>Confirmed supports are placed in two well-bought areas: 31197-497 and 31536-764. Other support areas are placed at 31753-920, 32111. The 31861 level still remains a key one.</p>
<p>31036-31125 is still to be considered critical support for the monthly level. Confirmed 30953-815, 30715-614, 30559-381, 30253-136, and 29696-29906.</p>
<p>The 29485 mark remains a critical one. In addition to the 29619-529 and 29338-29264, the support zones 29159-28876 and 28800-28685 are again kept. These are all excellent supports to look for long entry opportunities from pullbacks. Should they all be pierced to the downside, prices could move toward 28319, 28051, 27765, and 27019 in extension.</p>
<p>New resistance zones in the 34365-441 and 34476-577 areas. Trespassing these levels could lead to a strong rebound.</p>
<p>Confirmed 34653-706, 34765-881, 34908-975, 34997-35109. These zones are impregnable walls and only a significant volumetric force could change the weekly direction of the markets. Additional resistances in areas 35166 and 35273-378-444.</p>
<p>35539-591 confirmed. At 35620 the gap of August 2nd will be filled. Final resistance in area 35673-715.</p>
<p>The break of this monthly resistance zone opens the gateway to the 36068 weekly target.</p>
<p>Monthly positioning of the price above 35599-963 could offer a new bullish direction on a yearly basis. A movement that will go through 36529, managing to keep this level, would offer the possibility of reaching the 37000 area if prices forcefully break the last resistance placed in the 36786 area. Above 36236, we keep the possibility of further volumetric upward thrusts.</p>
<p><strong>IMPORTANT NOTE:</strong> The market has just started to fall, as we forecasted in early August. If there won’t be strong breaks of the weekly resistances, the pullbacks, even violent ones, will be excellent opportunities to re-enter in short positions. Avoid entering during breakouts and wait for the prices, after the pullbacks, to start showing a clear downward movement. The volatility remains high, so avoid any entries with a high probability against it. Although a strong recovery is still possible, it’s important to analyse the performance around the weekly resistance levels to evaluate the potential for short entries over multiple days.</p>
<p>Also, this week, it is wise to note Monday’s openings and Friday’s closings for confirmation or denial of the current trend. Avoid overtrading and watch for volatility imparted by HFTs. Mark any gaps that may also appear during the week, with particular attention to those on Monday.</p>
<p>Happy trading!</p>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/dax-40-dow-jones-weekly-analysis-28th-august-1st-semptember-25277/">DAX 40 & DOW JONES: Weekly analysis 28th August – 1st Semptember</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>