DAX 40 & DOW JONES: Weekly analysis 4th – 8th September

<h2>Market movers</h2>
<p>Last week, mixed macroeconomic data stirred some excitement among investors who are taking for granted the end of the FED’s tightening policy, a potential pause in rate hikes for September, and the possibility of rate cuts before the end of the year.</p>
<p>On Monday, American stock exchanges will be closed for Labor Day.</p>
<p>The coming week will unveil some macroeconomic data of a certain degree of interest.</p>
<p>On Tuesday, 5 September, we will have the RBA rate decision. The RBA is expected to keep interest rates unchanged at 4.1% for the third consecutive meeting, with the last session led by the RBA Governor Philip Lowe before his term concludes.</p>
<p>The US ISM Non-Manufacturing Index is due to be released on Wednesday. Additionally, the BOC will release its interest rate decisions. At the latest meeting, the BoC raised interest rates by 25bps to 4.75%, amid fears of inflation persistently above 2%.</p>
<p>On Thursday, the European Union is going to publish the annual GDP data, while the United States will publish initial jobless claims data.<br />
Germany is set to release inflation data on Friday, which could show a slight reduction. Additionally, on Friday, Japan will release its GDP data.</p>
<p>Chinese data will dominate market news headlines throughout the week, ranging from the PMI data to inflation figures. Concerns over the health of the Chinese economy have been gaining traction in recent weeks as data worsens and as the property sector shows more signs of weakness. It’s worth noting that we cannot exclude additional monetary stimulus measures from the Chinese Central Bank.</p>
<p>Furthermore, speeches from Lagarde and various members of the FED could bring volatility into the market.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>After two consecutive weeks of lower lows, the Dow Jones closes higher. The price quotations reacted when they reached critical levels, preventing a further decline. However, if the American stock markets will move away from the edge of the abyss, danger could still be lurking around the corner. In fact, we have not yet witnessed a confirmation of the bullish reversal, at least in the short period. On the flip side, in the medium/long term, despite two bearish weeks, the trend remains biased to the upside.</p>
<p>The U.S. employment data released on Friday does not seem to be “signaling” a recession. We still believe that the economy will face a soft landing, which could lead to further rate hikes. On the other hand, if inflation continues to cool down, it could prevent the Fed from making more aggressive moves. We’ll closely monitor the developments in the coming weeks.</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;P500 index closed significantly higher, after attempting to test the resistance located in the 4550 area and closing on Friday in the 4519 area.</p>
<p>New supports in the 4509-4506, 4501, and 4490 areas. The latter is particularly important because breaking it could lead to steep declines. Other supports in the area 4479-4470, 4462, 4454-4439, and 4432-4425, the level from where last week’s rise started.</p>
<p>Confirmed 4409-4398-4387 and 4370-4355, which both become 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 4521-4534 and 4538-4545 areas. Confirmed the key resistance in the 4550 area, which becomes weekly. Other resistances in the 4564, 4575-4580 areas, and the resistance that offers a new bullish lunge are in the 4595-4607 area. Confirmed resistances 4617-4622 and 4629-4632.</p>
<p>The upside targets are still 4662 and 4680, beyond which important resistance levels must be overcome before reaching new all-time highs.</p>
<p>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? Prices are stagnating beneath crucial resistance levels and next week, we could witness a potential new bullish lunge. Everything is still on the table. The most critical date in September will be the 29th.</p>
<p><img decoding="async" class="alignnone wp-image-25400 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-81-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week the German index put up with some bullish pressure, reaching the weekly resistance located in the 15983-16024 area. The Dax closed on Friday in the 15850 area.</p>
<p>New supports in areas 15758-725 and 15710-675. 15637-554 and 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>Critical area in the 13814-781 zone. 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 15830-889 and 15912-970 area. The recovery of these areas could lead to vertical bounces paired with the break of 15983-16024.</p>
<p>16054-104 confirmed and became new weekly support. Breaking these levels could lead to a fast rebound up to key resistance at 16225-253, where Tuesday’s 2 August gap will be filled. Additional resistances in the 16272-335 area, the breaking of which could 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 15675, the trend will move strongly downwards again.</p>
<p><img decoding="async" class="alignnone wp-image-25403 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-82-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – Last week, the index posted a powerful rebound, leading prices to an attempt to break through some extraordinary resistances such as 34653-706, 34765-881, 34908-975, and 34997-35109. On Friday the prices closed in the 34823 area.</p>
<p>New supports in area 34709-607, 34580-539, 34457-383.</p>
<p>34322-201 and 34159-059 confirmed. 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.</p>
<p>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 34756-833 and 34871-958 areas.</p>
<p>Confirmed the 34997-35109, whose break could lead to a new powerful rebound. Other resistances in the 35166 and 35273-378-444 area.</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 regained some important weekly resistance levels. Early September generally brings a major pullback period, so it will be possible to continue to witness further price rebounds. We would like to remind that an increase in volatility will bring prices down forcefully; and as a result, we will keep shorting the equity markets.</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-4th-8th-semptember-25410/">DAX 40 & DOW JONES: Weekly analysis 4th – 8th September</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>