Germany’s DAX has rebounded and opened higher after breaking above the top of a price channel. The move is described as part of an extended upward phase that can unfold in five waves.
The index is testing resistance in the 24,100 to 24,364 range, where a short-term pullback may happen. After any near-term retracement, the next target is around 25,000, where there is also a gap from 2 March.
Technical Outlook And Key Levels
The update indicates a possible bottom and scope for further gains. If the DAX falls back below 23,400, the broader correction from the January highs may still be continuing.
Looking back at our analysis from early 2025, the breakout we identified in the DAX was indeed the beginning of a significant move higher. That period’s resistance around 24,364 was decisively breached, and the index never returned to the 23,400 invalidation level. The rally ultimately surpassed our initial 25,000 target within that same quarter.
Given the current market environment in April 2026, we see fundamental support for this continued strength. Recently released data showed German inflation in March 2026 fell to 2.1%, its lowest level in nearly two years and just above the European Central Bank’s target. This reinforces market expectations that the ECB may begin lowering interest rates by this summer.
Investor sentiment is also very strong, providing a tailwind for equities. The latest ZEW Economic Sentiment survey for April 2026 surged to 45.2, significantly beating forecasts and marking the ninth consecutive month of improvement. This suggests institutional investors are increasingly optimistic about Germany’s economic outlook for the remainder of the year.
Derivatives Positioning And Volatility
For derivative traders, this suggests positioning for further upside in the coming weeks. Buying call options on the DAX with May or June 2026 expiries would be a direct way to capitalize on the positive momentum. With the index now trading above 27,000, strikes around 27,500 could offer a good balance of risk and reward.
Another approach would be to sell out-of-the-money put credit spreads. This strategy allows traders to collect premium while expressing a bullish-to-neutral view on the market. Establishing these positions below key short-term support levels could provide a buffer if a minor pullback occurs.
Volatility is also a key factor, with the VDAX-NEW index recently trading near multi-year lows around 14.2. Such low implied volatility makes long options strategies, like buying calls, relatively inexpensive at the moment. This presents an opportune time to enter bullish positions before any potential rise in market uncertainty.
