Insights 
VT 
The DAX Index is nearing the end of a cycle originating from its April 2025 low, developing as wave (5). Following the June 19 low, wave (5) evolved in an ending diagonal Elliott Wave pattern, peaking in wave 1 to 24639.1 and pulling back in wave 2 to 23284.67.
The Index then surged in wave 3 with sub-waves, starting at 23785.24, briefly dipping at 23383.84, rising to 24524.11, retracting to 24269.94, and finalising at 24771.34. Wave 4 presented a double zigzag structure with sub-wave declines and rebounds, setting a low at 23682.73.
Market Trends and Wave 5
Wave 5 commenced upwards from this low, reaching 24384.24, with an anticipated wave ((ii)) pullback to correct from October 17’s low. With the correction supportive of future ascents, the pivot at 23682.73 should attract buying interest amid specific swing counts.
An Elliott Wave chart update for 10.23.2025 was noted. Further content from the Elliott Wave Forecast Team was shared without suggestions for buying or selling assets, noting that all market information carries risks and uncertainties. Readers are urged to conduct thorough research before making investment decisions.
The DAX appears to be in the final stage of an upward cycle that began in April 2025. This current market structure is an ending diagonal, which suggests the trend is nearing exhaustion. We should be preparing for a significant reversal after one last push to new highs.
A small pullback is expected in the immediate future before the index makes its final ascent. This dip could provide a brief opportunity to enter short-term bullish positions, but the key pivot to watch is 23682.73. As long as the index remains above this level, the structure for one more rally remains intact.
Economic Indicators and Their Impact
This market optimism is partly fueled by recent economic data showing the German IFO Business Climate index unexpectedly rose to 92.5. With Eurozone inflation also cooling to 2.1% last month, many are speculating that the ECB may signal a rate cut from its current 3.5% level in early 2026. This sentiment is helping to support the final leg of this rally.
Since ending diagonal patterns historically precede sharp and swift reversals, we should plan to protect profits on long positions as the market moves higher. We have seen similar topping formations before major downturns in previous market cycles. Therefore, preparing a bearish strategy, such as buying put options dated a few months out, should become the primary focus once this last rally loses momentum.
Currently, the VDAX-NEW volatility index is sitting near a relatively low 18, suggesting option premiums are not yet overly expensive. This presents a window to structure bearish positions for the anticipated downturn at a reasonable cost. The strategy now is to wait for confirmation that the final high is in place before committing significantly to short side trades.
