As is so often the case, the DAX was also infected by the positive mood in the USA last week. The S&P 500, the Dow Jones, the Nasdaq 100 and the Nasdaq Composite all rose to new all-time highs. The focus was particularly on the consumer prices published on Wednesday afternoon. After producer prices came in slightly higher than the market had expected on Tuesday, there were fears that consumer prices might also be hotter and signal ongoing inflationary pressure. However, with CPI at 3.4 % on a YOY basis, expectations were confirmed and the trend towards disinflation continued compared to the previous month.<\/p>\n\n\n\n
Further economic data signaled a moderate slowdown in the economy. The combination of declining inflation data and an economic slowdown gives the US Fed more leeway to cut interest rates from September.<\/p>\n\n\n\n
Developments in the US, and in particular the Fed's interest rate policy, also play an important role for the European financial markets and should be monitored closely. The DAX reached a new all-time high on Wednesday and rose to just under 18,900 points.<\/p>\n\n\n\n
<\/a>Upward trend opens up opportunities<\/h2>\n\n\n\nAs you can see on the chart below, the DAX is in a \u201cclean\u201d upward trend, which was confirmed by the new all-time high. The moving averages also confirm the trend.<\/p>\n\n\n\n![\"DAX](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2024\/05\/word-image-50402-1.png\")
<\/figure>\n\n\n\nDAX Index daily chart with moving averages and support zones<\/p>\n\n\n\n
Depending on the time horizon and trading strategy, there are different options for traders and investors. First of all, it has once again been proven that in an upward trend with such strong momentum, no attempt should be made to trade against the trend. In most cases, corrections are an opportunity to seek entries at more favorable prices and with a better risk\/reward ratio and should generally not be used to speculate on a reversal of the primary trend as long as there are no clear signs of this.<\/p>\n\n\n\n
The trend is currently once again in an advanced movement phase of the upward trend. If you want to jump on the trend now, you should always allow for a correction. It is better to be patient and look for entries in the area of a support zone. The first important support level is located at around 18,500 points, in the area of the local highs from the end of March and the beginning of April in conjunction with the daily EMA 20 (purple). The next support area is around 18,200 points. This is where the EMA 50 (green) runs, which has not been breached since the start of the rally in November; the horizontal support area and the trend line also offer support.<\/p>\n\n\n\n
In addition to directional long trades, selling put options near the above-mentioned support areas or a few points below them is a good way to generate a premium income. Depending on the strategy, it may make sense to hedge sold puts (short puts) by buying a corresponding number of puts with a lower strike price in order to reduce the risk (bull put spreads).<\/p>\n\n\n\n
<\/figure>\n\n\n\nDAX Index daily chart with moving averages and support zones<\/p>\n\n\n\n
Depending on the time horizon and trading strategy, there are different options for traders and investors. First of all, it has once again been proven that in an upward trend with such strong momentum, no attempt should be made to trade against the trend. In most cases, corrections are an opportunity to seek entries at more favorable prices and with a better risk\/reward ratio and should generally not be used to speculate on a reversal of the primary trend as long as there are no clear signs of this.<\/p>\n\n\n\n
The trend is currently once again in an advanced movement phase of the upward trend. If you want to jump on the trend now, you should always allow for a correction. It is better to be patient and look for entries in the area of a support zone. The first important support level is located at around 18,500 points, in the area of the local highs from the end of March and the beginning of April in conjunction with the daily EMA 20 (purple). The next support area is around 18,200 points. This is where the EMA 50 (green) runs, which has not been breached since the start of the rally in November; the horizontal support area and the trend line also offer support.<\/p>\n\n\n\n
In addition to directional long trades, selling put options near the above-mentioned support areas or a few points below them is a good way to generate a premium income. Depending on the strategy, it may make sense to hedge sold puts (short puts) by buying a corresponding number of puts with a lower strike price in order to reduce the risk (bull put spreads).<\/p>\n\n\n\n