DAX 40 & DOW JONES: weekly analysis 17th – 21st July

<h2>Market movers</h2>
<p>Stock exchanges maintain a bullish stance again this week, thanks to cooler-than-expected US Inflation data and the excellent quarterly results of the US bank sector.</p>
<p>This week the Chinese industrial production data, released on Monday, should be monitored carefully.</p>
<p>Another data set to pay close attention to is the UK inflation data, especially after wage growth managed to record an increase last week.</p>
<p>US retail sales data will be also released despite the FED and weak labor market growth, expectations are for a 0.5% hike.</p>
<p>Moving to the corporation side, the US quarterly earnings season continues.</p>
<p>Netflix and Tesla are set to release their earnings on Wednesday. In the banking sector, Goldman Sachs, Bank of America, and Morgan Stanley are also scheduled to release their earnings. Both Goldman Sachs and Morgan Stanley have implemented employee layoffs to mitigate costs amidst economic uncertainty impacting their trading and advisory businesses.</p>
<p>The bar has been set lower for this earnings season and disappointing numbers could help slow down the S&amp;P500 rally.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>Despite the weakness of the dollar, which has experienced the worst week since November 2022, the stock exchanges managed to close higher but still struggled to take an assertive upward path. However, it should be noted that, at least in the short term, all the conditions have been in place for a major rise in the American stock exchanges.</p>
<p>At the moment of writing, the thesis that forecasts a significant peak within the first fifteen days of August is still valid. For now, everything has happened as per our forecast, and between September 2022 and March 2023, all international markets have reached their lower levels (which could also be the ten-year lows).</p>
<p>At the beginning of the week, we will monitor the behavior of the price action again to understand if prices will immediately turn upward or if we will witness a possible correction.</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 closed the week with a slight decline, after trying to break the annual resistance located at 4554. This level will be crucial to call off the drawdown started in April 2022.</p>
<p>New supports in areas 4535-4529, and 4511-4499. If these mentioned levels will be lost, a major correction could begin. The next support is in 4463-4453-4436 area, which is also the weekly support zone. 4429-4420 is well confirmed. 4418 and 4403 are also confirmed. Other supports in area 4394 and key 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 supports in areas 3930-3905-3899, 3945-3957-3961, 3979, 3993-4000, 4032-4043. 4064-4075 is still a critical mark for support levels.</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 4545-4557 areas. This level must be broken to see the downtrend that began in April 2022 reversed. The 4580-4590 is the area to overcome to break down the monthly resistance placed in the 4613 area.</p>
<p>A weekly closure above 4613 may guarantee a reversal of the annual trend if confirmed monthly; the next targets remain 4717 and 4780.</p>
<p>How to move? Confirming that the long-period probabilities do not face any threats, prices managed to close on Friday, posting a solid downward pressure. We believe that in the next few days, on Monday or Tuesday, we could witness another short-term retracement if prices do not veer strongly upwards. In that case, we should witness further bullish strength until the last week of July.</p>
<h2><img decoding="async" loading="lazy" class="alignnone wp-image-24292 size-full" style="font-size: 16px;" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-52-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></h2>
<p><strong>DE40</strong> – The German index posted a tremendous recovery last week, after stabilizing at the support area in 15601-473. Prices reached the resistance at 16215-165, before pulling back slightly on Friday.</p>
<p>New support in areas 16046, 15973-900, 15814-749, and 15631, and the new weekly support is 15596-439. Supports in 15439, 15368-308, and 15287-247 areas are well 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 areas 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 at 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 16086-123 and 16215-160. Confirmed resistance in areas 16230-280 (weekly) and 16320-408. The break of 16408 would open up to further rises toward the final annual target located in the 16500 area. Beyond this, we could witness an attack on the 16700-17000 area.</p>
<p>If by the following Friday, prices remain above 16111, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 15771, the trend will move strongly downwards again.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24295 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-53-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – After reaching the weekly support at 33712-660, the Dow Jones index managed to close the week higher, in proximity to the weekly resistance at 34607-706.</p>
<p>New supports in areas 34270, 34235-175, 34142-076. Other supports in areas 34000 and 33931-861. All these zones should be carefully monitored because the buying orders didn’t strengthen the current week’s uptrend, so any collapses could lead the price action to pierce all the support levels.</p>
<p>Confirmed 33712-660 as weekly support and also 33559-434 is confirmed. The break of these zones could lead to strong bearish accelerations.</p>
<p>Other supports were placed in 33305, 33216-039, and 32975-858 areas. This whole zone is the new weekly support. Underneath, it will be possible to witness new bearish accelerations. Other supports in the 32804 and 32725 areas became monthly supports.</p>
<p>Additional supports in the following areas: 32499-632, the loss of which could lead to monthly trend reversals. Next 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 are located at 34504-591. Confirmed also the 34607-706 which remains the weekly resistance. The next targets are 34801-34950 and the break of 35000 points.</p>
<p>Monthly positioning of the prices above 35599-963 could offer a new bullish direction; 35157 and 35614 areas are significant because they may lead to either direction extensions. Monitoring this whole price area is extremely important.</p>
<p>A move through 36529 and holding that level would allow seeing area 37000 if prices forcefully break the last resistance placed at area 36786. Above 36236, we maintain the option of further bullish volumetric thrusts.</p>
<p><strong>IMPORTANT NOTE:</strong> The market is under pressure but as long as the weekly support levels manage to hold, there will be no chance of a steep drawdown. We are probably experiencing the last bullish month before a break till September. Any downward that is supposed to recover quickly will be a good opportunity to re-enter long.</p>
<p>Also, this week, it’s a good idea to note the openings on Monday and the closings on Friday, to confirm or deny the current trend. Avoid overtrading and watch out for the volatility imprinted by HFTs. Mark any gaps that may also appear during the week, paying particular attention to those on Mondays.</p>
<p>Happy trading!</p>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/dax-40-dow-jones-weekly-analysis-17th-21st-july-24302/">DAX 40 & DOW JONES: weekly analysis 17th – 21st July</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>