DAX 40 & DOW JONES: Weekly analysis 14th – 18th August

<h2>Market movers</h2>
<p>Last week the inflation data caused some concern, given the mild rebound that exceeded expectations. The data, on an annual basis, decreased from 3.2% to 3.0% in June. In the meanwhile markets continue to push downwards alternating between ups and downs.</p>
<p>The coming week will be interesting for the macroeconomic and corporate data.</p>
<p>On Wednesday evening, the most critical data will be released. The Federal Reserve will unveil the minutes of the last meeting in which it raised interest rates to 25bps. The data is now somewhat outdated as the decision was made before higher inflation was reported for July. However, the next Fed meeting will be at the end of September. The USD has been grinding higher since the report, with the dollar index comfortably above 100.</p>
<p>On Tuesday, we will evaluate the Japanese GDP, the industrial production from China, the ZEW German index, retail sales from the US, and inflation data from Canada.</p>
<p>On Wednesday, we will wait for the RBNZ rate decision. NZD/USD is testing 2023 lows, at the 0.60 round number, as the Reserve Bank of New Zealand remains on hold from rate hikes. Another decision to hold, all else equal, could help a breakdown in the currency pair. The UK will release up-to-date inflation data, while Europe will release quarterly and annual GDP data. Building permits in the USA should also be monitored.</p>
<p>On Friday we will have inflation data from Japan.</p>
<p>Q2 earnings season is nearing the end, but there are still reports from the major US retailers to go. Walmart is so important that acts as a benchmark for the US consumer and economy.</p>
<h2>Analysis of the week and scenarios for DAX and Dow Jones</h2>
<p>After the long bullish phase, last week’s prices had shown signs of a sort of weakness, which continued during the week that has just ended. Resistance levels continue to slow down the price trend, at least on a weekly basis, and the overview remains bullish. Therefore, US stock markets continue to exhibit uncertainty about which direction to take. However, at any moment, US stock exchanges could start a directional solid phase.</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.</p>
<p>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>A bearish swing has formed this week, a pattern that in 82% of cases will bring declines of at least 7/10% from the maximum posted pre-crisis. We will monitor its evolution.</p>
<p>Beyond the rhetoric of the debt ceiling, the recession, and the banking crisis, only a strong 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;P500 index posted a substantial decline, after having tested the resistance at 4524-4534-4550, closing Friday in the 4484 area.</p>
<p>New supports in 4484-4471 areas. From this last level, if forcefully lost, a major correction could really begin. Next, supports in the 4463-4453-4436 area, which is also the weekly support zone. 4429-4420 is confirmed. 4418 and 4403 is also confirmed. Other support in area 4394 and critical support in area 4386-4370.</p>
<p>4368-4355 are again confirmed. Below it, downward accelerations are possible, with the first target in the 4304 mark. Confirmed the 4274-4263, and if these levels are to be trespassed, it will bring a downward acceleration toward 4249, then 4227-4223, the whole zone where volumes managed to concentrate in recent weeks.</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, 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 4499-4502 and 4508-4514-4520 areas. Intermediate resistances in areas 4525-4531 and 4535-4542. Confirmed the weekly resistance at 4550. Other resistances in the 4564, 4575-4580 areas, and the resistance level that offers a new bullish lunge are located in areas 4595-4607. Confirmed resistances 4617-4622 and 4629-4632.</p>
<p>The upside targets are still 4662 and 4680. Important resistances could really come into play from these two levels before new historical highs are reached.</p>
<p>The weekly closure above 4613 guarantees the annual trend reversal if confirmed on a monthly basis; the next targets remain 4717 and 4780.</p>
<p>How to move? The downtrend in the markets could last till September, but pay attention to the next short-term dates, where turning points could be revealed: August 17th, 28th, and 30th</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24974 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Dax-180823-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week, the German index posted a strong sideway movement with high volatility, trapped between the resistance at 16048-104 and the support at 15814-749.</p>
<p>New supports in area 15861-832. Confirmed the 15814-749, 15631, and the weekly support at 15596-439. Supports in areas 15439, 15368-308, and 15287-247 confirmed. Followed by 15152-196, 15247-287 and 15308-368. These zones represent the strength of the ongoing rally and must be held for it to continue the movement.</p>
<p>Supports in 14957-14844 and 14737-603 are confirmed. This area becomes the weekly 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>Monthly support in the 13621 area. The Dax left a huge volumetric gap after the FED’s inflation figures, easily penetrated at the loss of 13975.</p>
<p>Solid supports in the 13692-608, 13550-516, and 13457-410 areas. Confirmed support is around 13314-333, 13331-410, and 13438-467.</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 Oct 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 area 15883-953, 15983-16024, and 16054-104. Breaking these levels could lead to a swift rebound to the weekly resistance in the 16225-253 area, where the gap of Tuesday 2 August will be filled. Other 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 16289, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 15782, the trend will move strongly downwards again.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24977 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/us30-180823-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – Last week the index remained stuck in a narrow range, despite the general bearish pressure, between 35539-591 and 35068-135, previously indicated as resistance levels.</p>
<p>New supports in area 35323-207. Prices should t move below this zone to avoid further weekly declines. 35135-068 (first resistance) and 35036-34981 confirmed. The break of these volumetric zones could lead to new sell-offs targeting intermediate supports located in 34936, 34824, and 34745 first and then towards 34612-569 and 34509-445 which became weekly levels.</p>
<p>34270, 34235-175, 34142-076 are again confirmed. Other supports in areas 34000 and 33931-861.</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 area 32804 and 32725, monthly supports. Other supports in area 32804 and 32725, 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 areas of resistance at 35376-444 and then confirmed at 35539-591. At 35620 we will close the gap posted Tuesday, August 2nd. Final resistance in area 35673-715.</p>
<p>Again 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. Starting this week, the likelihood of a flash-crash is increasing.</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/weekly-market-updates/dax-40-dow-jones-weekly-analysis-14th-18th-august-24986/">DAX 40 & DOW JONES: Weekly analysis 14th – 18th August</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>