The DAX fell from its 11 July 2025 high and formed an expanded flat Elliott Wave correction. Wave A ended at 22,943.06 and wave B rose to 25,507.79, before wave C started and formed a five-wave drop.
Within wave C, wave ((i)) reached 24,349.54, wave ((ii)) rose to 25,405.97, and wave ((iii)) fell to 22,927.55. Wave ((iv)) bounced to 24,061.15, then wave ((v)) dropped to 21,886.1, completing wave C of (2).
Wave Three Validation Outlook
From 21,886.1, the index moved up into wave (3), with validation linked to a move above 25,507.79, the wave B high. If that level is not cleared, a second correction remains possible.
From wave (2), wave (i) rose to 23,178.7 and wave (ii) dipped to 22,209.45. Wave (iii) then reached 23,377.65 and wave (iv) eased to 22,677.92, with a further rise expected to finish wave (v) of ((i)).
A later pullback in wave ((ii)) is projected from the 23 March 2026 low. While 21,886.1 holds, dips may form 3, 7, or 11 swings.
From the perspective of early April 2026, we see the DAX has likely completed a significant correction from its high back in July 2025. The index appears to have bottomed out on March 23, 2026, at 21,886.1, which now serves as a critical support level. This suggests that the primary trend has shifted upwards, presenting new opportunities for traders in the coming weeks.
This bullish outlook finds support in recent economic data, which has been showing signs of improvement. The latest ZEW Economic Sentiment survey for Germany, released in late March 2026, surged to an 18-month high of 25.2, indicating growing optimism in the financial markets. Additionally, February 2026 industrial production figures showed a modest but better-than-expected 0.5% increase, driven by a rebound in the automotive sector.
Trading Strategy And Key Levels
In the immediate term, we expect the market to complete a small five-wave rise before a corrective pullback, known as wave ((ii)), occurs. Any dips towards the 22,600-22,800 area should be viewed as buying opportunities, as long as the key pivot at 21,886.1 remains unbroken. These pullbacks are considered healthy corrections within a new uptrend.
For derivative traders, this environment is well-suited for buying call options or establishing bull call spreads on any weakness. The VDAX-NEW volatility index has recently fallen below 20 for the first time in months, down from its peak of over 28 during the correction, making options relatively cheaper. This allows us to position for upside with defined risk.
The main challenge ahead is the resistance level at 25,507.79, which was the peak of a rally last year. A decisive break above this point would confirm that a powerful, sustained bull market is underway, likely triggering a wave of new buying. We could position for this by placing buy-stop orders on futures contracts just above this key level.
However, risk management remains essential, as failure to break above 25,507.79 could lead to a more complex and prolonged sideways market. A drop below the 21,886.1 low would invalidate this entire bullish structure, signaling a potential return to the prior downtrend. Therefore, all long positions should have protective stop-loss orders placed below this critical support.
