The DAX (XETRA: DAX) is described as remaining in a bullish Elliott Wave configuration after completing red wave 4 at 24,651. The uptrend is said to have resumed once the index moved above the red wave 3 high at 25,900, placing red wave 5 in progress. The advance from the 21,863 low is framed as a five-wave impulsive structure, with 24,651 cited as the invalidation level that would challenge this view.
On a 60-minute Elliott Wave chart, wave 5 is presented as forming a bullish nest via a ((i))-((ii)) and (i)-(ii) sequence, with price advancing in wave (iii) of the next degree. The outlined pathway includes a prospective corrective phase in wave (iv) after wave (iii) completes, before the structure progresses into ((iii)) and ((iv)). Within this count, 26,702 is identified as the initial upside target for red wave 5, while the structure allows for a potential extension beyond that level.
Trading Strategy and Risk Management
As we enter the mid-August trading period of 2026, we advise derivative traders to lean heavily into bullish strategies on the DAX. The index’s breakthrough above the 25,900 level signals that the market has entered a strong fifth-wave rally, meaning buying call options on minor pullbacks is currently the most viable path. We recommend setting tight stop-losses just below the critical invalidation level of 24,651 to protect capital while riding this upward momentum.
Supporting Fundamentals and Leverage Considerations
This bullish technical setup is well-supported by fundamental data, particularly as the European Central Bank’s monetary policy adjustments over the last year continue to stimulate Eurozone corporate credit. Historically, the DAX has shown robust performance during easing cycles, often yielding double-digit annual returns when interest rates decline. Additionally, strong export data from Germany’s industrial sector has helped push the index’s year-to-date gains in 2026 past 14%, mirroring the classic post-recession recovery patterns of 2012 and 2020.
For those utilizing leverage, we suggest focusing on bull call spreads or long futures contracts to capture the projected move toward our initial target of 26,702. The short-term charts point to a minor corrective pullback in the near term, which we view as an optimal entry point rather than a sign of trend reversal. If the index breaks past 26,702 with high trading volume, traders should prepare to roll their call options upward to capture further extended gains.
