DAX 40 & DOW JONES: weekly analysis 3rd – 7th July

<h2>Market movers</h2>
<p>Stock exchanges carry on posting new highs, thanks to cooling inflation, positive macro data that ward off recession fears, and the AI frenzy. Furthermore, the FED is closer to terminating the rate hike cycle. Central bankers, reunited in Sintra Portugal, maintained a bullish bias on rates except for Japan.</p>
<p>Despite the Independence Day on July 4, which will reveal limited trading hours for US stocks and reduced volumes through Wednesday, this week we will have a flood of macro data and events to follow.</p>
<p>On Monday, we will have the ISM manufacturing PMI while the RBA is supposed to keep rates unchanged on Tuesday.</p>
<p>On Wednesday, the FOMC minutes for June will be scrutinized by investors to deduce the chances for further rate hikes, even if the markets already discount the July hike.</p>
<p>The Opec cartel will meet on July 5 and 6 to discuss future oil production.</p>
<p>Finally, on Friday, the non-farm payrolls will be pivotal in understanding the labour market&#8217;s resilience.</p>
<p>The events in France should be monitored carefully because the accidents could lead to tension in the European markets.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>At the end of the week, the US stock exchanges revealed signs of strength, but there is no confirmation that the upward movement has already started and that the sideways phase that has been ongoing for a long time is now behind us. Therefore this week could be the decisive one for a bullish recovery.</p>
<p>At the moment of writing, the thesis that confirms a significant peak will be reached within the first fifteen days of August is still valid.</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 unfavorable 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 changed the course strongly upwards, reaching 4497, which is the new peak for the year, after piercing the weekly resistance placed at 4467-4484.</p>
<p>New supports in 4453, 4436-4429, 4424-4418 and 4403 areas. Other support in area 4394 and weekly support in area 4386-4370.</p>
<p>4368-4355 is 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 becomes a new 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 the key 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. Support around 3644-3651 marks 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 4494-4482-4474 areas. The loss of the latter level and 4467 could lead to further accelerations downwards.</p>
<p>The 4506 and 4554 are the resistance levels to 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 every month; the next targets remain 4717 and 4780.</p>
<p>How to move? Confirming that the long-period probabilities do not face any threats, a small short-period peak was posted on Friday. For now, in the next few days, we could witness a retracement on Monday or Tuesday. Tuesday is to be considered a set-up day, and therefore the performances posted on Tuesday will be considered a partial minimum/maximum.</p>
<p>If there won&#8217;t be any weird maneuvers, always possible during days like these, the retracement will be useful for the purpose of loading up new position lots.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24023 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-39-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week, the German index posted a strong recovery after an attempt to break down the weekly support located in the 15733-687 area. On Friday, prices managed to touch the weekly resistance at 16072-16163.</p>
<p>A key area is located at 16163-094. Managing to keep this area, or also leaving it, could lead to a strong trend. New supports in areas 16028-15970, 15908, and 15857-769.</p>
<p>Confirmed the weekly support in area 15733-687. Support zones 15657-603, 15652 and 15538-510 confirmed. Below the latter level, prices can create a robust downward acceleration. On the other hand, if those levels won’t trespass, we could witness an important restoration in price levels.</p>
<p>Supports in areas 15439, 15368-308, and 15287-247 are well confirmed. Followed closely 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>Support in areas 14957-14844 and 14737-603 are confirmed. This area becomes the weekly level for new upward movements or heavy drawdowns.<br />
Confirmed intermediate supports: 14138-184, 14342, 14414-545.</p>
<p>New critical zone in the 13814-781 area. 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>Supports in the 12808-766 area are confirmed. 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 volume concentration and 12353-275, the first bullish turn zone. Confirmed supports in the 12223 and 12136 areas.</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>Confirmed resistance in the 16230-280 (weekly) and 16320-408 areas. The break of 16408 would open up 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 will remain above 16163, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 15733, the trend will move strongly downwards again.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24026 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-40-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> &#8211; After reaching the support at 33712-660, the Dow Jones index managed to close the week higher, touching the resistance at 34607-706.</p>
<p>New supports in 34472-346, 34239, 34102-33967 and 33896-773 areas. Confirmed 33712-660, which represents new weekly supports. Also confirmed 33559-434. 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 confirmed. 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 whole resistance zone in area 34511 and confirmed 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 posting new highs but we are probably experiencing the last bullish month before a break till September. Any downward thrust that is supposed to recover quickly will be a good opportunity to re-enter long. If the weekly supports manage to hold up, there will never be a reversal trend, however, vertical thrusts still have a chance to manifest.</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-3rd-7th-july-24038/">DAX 40 &#038; DOW JONES: weekly analysis 3rd – 7th July</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>