GER40 (DAX) – Bearish Continuation Setup | Jan 20, 2026
Market Context
The current macro environment remains fragile for European equities.
Eurozone growth continues to underperform, with Germany particularly exposed to:
Weak industrial momentum
Elevated energy costs
Soft business confidence expectations (IFO ahead)
At the same time, global risk sentiment is leaning risk-off, driven by geopolitical uncertainty and USD repositioning flows. This backdrop continues to weigh on cyclically sensitive indices such as the GER40.
Technical Structure (Elliott Wave Perspective)
From a technical standpoint, GER40 is trading within a confirmed bearish structure.
A strong impulsive move to the downside has already unfolded.
Price is currently consolidating in a weak corrective phase, consistent with a Wave 2 retracement within a larger bearish cycle.
The retracement remains shallow and overlapping, failing to reclaim key supply zones above.
This behaviour is typical of a market preparing for a Wave 3 continuation, rather than a trend reversal.
Key Technical Levels
Trigger (Confirmation Level): ~24,502
A decisive break and acceptance below this level confirms the end of Wave 2.
Stop Loss (Technical): ~24,725
Located above the corrective structure.
Structural Invalidation: ~24,790
A move above this level invalidates the bearish Elliott scenario.
Target 1 (Wave 3 Extension): ~24,025
Target 2 (Deeper Extension / Liquidity Zone): ~23,596
Risk/Reward improves significantly once price accepts below the trigger.
Execution Plan
Bias: Bearish
Horizon: Swing
Entry Condition:
Short only after a break and hold below 24,502 (confirmation-based entry).
No anticipation trades. No early shorts.
This setup favors patience over prediction. Until the trigger is broken with acceptance, the market remains in corrective mode.
Macro Alignment
This technical setup aligns with the broader macro thesis:
Eurozone growth concerns remain unresolved.
German data continues to underperform expectations.
Risk appetite is fragile, limiting upside follow-through.
Any short-term rebounds are likely corrective unless macro conditions materially improve.
Upcoming German IFO Business Climate data remains a key event risk. Position sizing should be adjusted accordingly.
Final Notes
This is a conditional continuation trade, not a forecast.
The setup does not exist until price confirms it.
If acceptance below the trigger occurs, the probability favors a sustained bearish leg.
If not, continued consolidation or a prolonged Wave 2 remains the dominant scenario.
Stay reactive.
Market Context
The current macro environment remains fragile for European equities.
Eurozone growth continues to underperform, with Germany particularly exposed to:
Weak industrial momentum
Elevated energy costs
Soft business confidence expectations (IFO ahead)
At the same time, global risk sentiment is leaning risk-off, driven by geopolitical uncertainty and USD repositioning flows. This backdrop continues to weigh on cyclically sensitive indices such as the GER40.
Technical Structure (Elliott Wave Perspective)
From a technical standpoint, GER40 is trading within a confirmed bearish structure.
A strong impulsive move to the downside has already unfolded.
Price is currently consolidating in a weak corrective phase, consistent with a Wave 2 retracement within a larger bearish cycle.
The retracement remains shallow and overlapping, failing to reclaim key supply zones above.
This behaviour is typical of a market preparing for a Wave 3 continuation, rather than a trend reversal.
Key Technical Levels
Trigger (Confirmation Level): ~24,502
A decisive break and acceptance below this level confirms the end of Wave 2.
Stop Loss (Technical): ~24,725
Located above the corrective structure.
Structural Invalidation: ~24,790
A move above this level invalidates the bearish Elliott scenario.
Target 1 (Wave 3 Extension): ~24,025
Target 2 (Deeper Extension / Liquidity Zone): ~23,596
Risk/Reward improves significantly once price accepts below the trigger.
Execution Plan
Bias: Bearish
Horizon: Swing
Entry Condition:
Short only after a break and hold below 24,502 (confirmation-based entry).
No anticipation trades. No early shorts.
This setup favors patience over prediction. Until the trigger is broken with acceptance, the market remains in corrective mode.
Macro Alignment
This technical setup aligns with the broader macro thesis:
Eurozone growth concerns remain unresolved.
German data continues to underperform expectations.
Risk appetite is fragile, limiting upside follow-through.
Any short-term rebounds are likely corrective unless macro conditions materially improve.
Upcoming German IFO Business Climate data remains a key event risk. Position sizing should be adjusted accordingly.
Final Notes
This is a conditional continuation trade, not a forecast.
The setup does not exist until price confirms it.
If acceptance below the trigger occurs, the probability favors a sustained bearish leg.
If not, continued consolidation or a prolonged Wave 2 remains the dominant scenario.
Stay reactive.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.