DAX Resuming Uptrend After Consolidation: A Bullish Case for Wave 5 Toward 25k–26k

The DAX index has long been a barometer of European economic resilience, and its recent price action paints a compelling picture of a market primed for a powerful upward thrust. After a disciplined consolidation in Wave 4, the index is now in the early stages of Wave 5—a final, impulsive leg that could propel the DAX toward 25,000–26,000 by late 2025. This isn't just a technical guesswork; it's a well-structured Elliott Wave narrative reinforced by Fibonacci extensions, momentum indicators, and volume trends. Let's break it down.

The Elliott Wave Playbook: Wave 4 Completed, Wave 5 Igniting

Since April 2025, the DAX has followed a textbook five-wave impulsive structure. Wave 1 concluded at 20,468.43, followed by a corrective pullback in Wave 2 to 19,384.39. Wave 3 surged to 24,479.42, and Wave 4—a classic zigzag correction—completed its ((a))((b))((c)) pattern by dipping to 23,047.13. This consolidation phase, which ended in early August, has now given way to Wave 5.

Wave 5 is typically the most aggressive leg of an uptrend, driven by institutional buying and widespread optimism. The DAX's current trajectory aligns with this pattern: Wave (i) of Wave 5 reached 23,481.97, Wave (ii) pulled back to 23,080.29, and Wave (iii) surged to 23,812.79. The recent Wave (iv) correction to 23,466.73 and Wave (v) push to 241,200.82 (a typo in the data, but likely a placeholder for 24,120.82) confirm the structure. Now, the index is in Wave ((iii)) of Wave 5, with the 23,407.13 pivot level acting as a critical support. As long as this level holds, the DAX is on track to extend its gains.

Fibonacci Extensions: The Roadmap to 25k–26k

Fibonacci extensions are the unsung heroes of trend continuation. For the DAX's Wave 5, the key levels to watch are 161.8%, 200%, and 261.8% extensions of the initial impulse from Wave 1 to Wave 3.

• 161.8% Extension (~25,000): This is the first major target for Wave 5. If the DAX clears this level with strong volume, it signals institutional confidence and validates the bullish case.
• 200% Extension (~26,000): A clean break above 25,000 would likely push the index toward 26,000, especially if macroeconomic data (e.g., German manufacturing PMI, European Central Bank policy) remains supportive.
• 261.8% Extension (Beyond 26,000): This level is reserved for euphoric trends, where speculative buying and momentum traders drive prices past rational valuations. While less likely, it's a valid target if the DAX's Wave 5 gains enough steam.

Technical Confirmation: RSI, MACD, and Volume Tell the Story

The DAX's technical indicators are in sync with the bullish narrative. The Relative Strength Index (RSI) remains elevated but not overbought, suggesting there's room for further gains before a pullback. The MACD is in a bullish crossover with a widening histogram, indicating accelerating momentum.

Volume patterns are equally encouraging. Strong volume on up days and quiet volume on down days confirm institutional participation. This controlled distribution is a hallmark of a healthy uptrend, not a speculative bubble. Traders should monitor volume spikes near key Fibonacci levels—surges at 25,000 or 26,000 would reinforce the case for continuation.

Risk Management: The Devil in the Details

While the case for Wave 5 is strong, no trade is without risk. The key support level at 23,407.13 must hold; a breakdown here would invalidate the Wave 5 count and trigger a deeper correction. Additionally, traders should watch for divergences in RSI or MACD, which could signal exhaustion.

For those looking to enter, partial entries on pullbacks to 23,620.42 (Wave ((ii)) support) or 23,407.13 offer high-probability setups. Position sizing should scale with the trend—lock in profits at 161.8% and trail stops as the index approaches 200%.

Final Call: Ride the Wave, But Stay Disciplined

The DAX is in a rare moment of clarity. After a disciplined Wave 4 consolidation, the index is now in a high-conviction Wave 5 leg. With Fibonacci extensions, momentum indicators, and volume trends all aligned, the path to 25k–26k is not just plausible—it's probable.

For investors, this is a chance to capitalize on a well-structured bullish trend. For traders, it's a textbook setup to ride the final wave of a multi-month rally. Just remember: the market doesn't always follow the script. Stay nimble, manage risk, and let the trend work for you.