Trade of the week: long DAX 40
The German DAX 40 stock index seems to be bouncing off Friday's and its 23 May lows. We would therefore like to go long the DAX 40 with a stop loss below the 23 May low at 23,268 and a potential upside target in the 23,900-to-24,000 range.
(Video transcript)
This week's trading opportunity
Axel Rudolph: "Hello and welcome to "Trade of the week" on Monday 16th of June, 2025. What I would like to do today might be quite counter-intuitive, but I would like to go along the DAX 40 Index, the German DAX stock index. And, if you look at the chart, you may be wondering why.
Well, you can see here that we've sold off, before the Israel-Iran crisis actually kicked off. And on Friday, we basically retested our previous low here, going back to the 23rd May. And, as you know, this is my line in the sand for a lot of the medium term uptrends - whether you're talking about US markets, European markets or Asian markets, it's the 23rd May low. And here what we're seeing is basically a break of this steep downtrend line.
But, more importantly, ignore the Sunday session on the Daily Financial Bet (DFB) because it's not when the market really traded. But, intraday, to just buy it here because we're forming something - we don't know what it is yet - is actually quite risky. But if you go onto the 60-minute chart, you can see that we've literally just managed at the open to break above these previous highs and seem to be holding there.
So, we're breaking above previous resistance, and that to me may indicate that we’ve formed a double bottom here. So, wave down. Test here. Down again. Test here, and we're now above it. So for that reason, even though the conflict is still ongoing, technically speaking, we may want to go short here. It's a risky trade, and I don't think we're going to retest the all time highs any time soon, but we may well head back up again towards the 30 period simple moving average (SMA) here around 23,900 or the 24,000 area before we perhaps come off again.
So, from that point of view, it still makes sense from a risk-reward point of view to actually go long around current levels. Now, you may put your stop below Friday's low here, but since the low on the 23rd May is just marginally below that low, I would place it there.
Previous weeks' trading outcomes
So, before we summarise this trade, I'd like to also talk about the trade from last week and that was to go long Brent crude oil. Basically were long on the break of that resistance area. And we now got out of that trade. If you haven't gotten out of that one, you can get out now if you want. But that was a nice setup, which made us about 7 or 8%, I believe. So that one worked out quite well.
And on the 19th May, on the break of that downtrend line, we went long Cable, GBP/USD. That one’s still ongoing. If you wanted to, you can move your take profit order up to the low seen on the 10th June, or, if you want a tighter one, to Friday's low. But that one is still ongoing.
This week's trade summary
So, coming back to today's "Trade of the week", what I would like to do is go long the DAX Index, the German stock index, with a stop-loss below the 23rd May low, which was on the Daily Financial Bet at 23,267, and an upside target between 23,900 or 24,000 or so.
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