The DAX Index is approaching the end of a cycle that started at its low in April 2025, currently forming wave (5). After hitting a low on June 19, wave (5) has taken shape in an ending diagonal pattern according to Elliott Wave theory. It peaked in wave 1 at 24639.1 and then pulled back to 23284.67 in wave 2. Subsequently, the Index rallied in wave 3, which included several smaller waves. It began at 23785.24, briefly dropped to 23383.84, rose to 24524.11, retracted to 24269.94, and ended at 24771.34. Wave 4 exhibited a double zigzag pattern, with ups and downs, reaching a low of 23682.73.

Market Trends and Wave 5

Wave 5 has started climbing from this low, hitting 24384.24. A pullback, labeled wave ((ii)), is expected after the low on October 17. This correction could support further upward movement. The key level to watch is 23682.73, as it should attract buyers based on swing counts. An update from the Elliott Wave chart on October 23, 2025, was shared, but no specific buying or selling advice was given. All market information carries risks, and readers should do their own research before making investment choices. The DAX seems to be in the final phase of an upward cycle that began in April 2025, showing signs of an ending diagonal pattern, which indicates the trend is running out of steam. Be prepared for a major reversal after one last push for new highs. A small pullback is anticipated soon before the index makes its final climb. This dip may provide a short-term opportunity for bullish positions, but keep an eye on the key pivot at 23682.73. As long as the index stays above this level, one more rally is likely.

Economic Indicators and Their Impact

Recent economic data is boosting market optimism, notably the German IFO Business Climate index, which unexpectedly rose to 92.5. With Eurozone inflation cooling to 2.1% last month, many expect the ECB to hint at a rate cut from the current 3.5% level in early 2026. This positive sentiment is helping fuel the last leg of this rally. Ending diagonal patterns often precede sharp reversals, so it’s wise to safeguard profits on long positions as the market rises. We have seen similar patterns before significant downturns in past cycles. Therefore, developing a bearish strategy, like purchasing put options a few months out, should be prioritized once this last rally shows signs of slowing. Currently, the VDAX-NEW volatility index is low at around 18, meaning option prices are not overly high. This creates an opportunity to position for the expected downturn at a reasonable cost. The plan is to wait for confirmation that the final high has been reached before making significant short trades. Create your live VT Markets account and start trading now.

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