- Instrument: DAX
- Average Pattern Move: +6.57%
- Timeframe: March 21 – June 07
- Winning Percentage: 90%
Market Analysis and Drivers
Germany’s DAX index has been hit by tariff concerns to start the week, with the auto sector at the epicenter of the fallout. The index has dropped by as much as 2.2%, with Volkswagen, Mercedes-Benz, BMW, Daimler Truck, Continental, and Porsche all sinking around 5% apiece. These losses come as US President Donald Trump reignites trade tensions with the EU, particularly targeting the automotive sector, which he has long criticized as a key contributor to the trade imbalance.
The uncertainty surrounding potential tariffs and retaliatory measures presents a significant downside risk to the DAX, but will seasonal strength provide a lifeline? Could this even provide a dip buying opportunity?
Despite near-term uncertainty, historical data suggests strong seasonal recency upside for the DAX between March 21 and June 7. Over the past 10 years, this period has produced:
- A +34.88% annualized return.
- A remarkable 90% win rate, with only one losing occurrence.
- An average return of +6.57%, while the median return sits at +4.18%.
The cumulative profit chart highlights a consistent upward trajectory, with max gains reaching +46.66%, while the largest drawdown in the dataset was -6.99%.
Technical Perspective
From a technical standpoint, the DAX’s recent pullback on trade concerns may take it closer to key support levels on the weekly chart. Critical support sits around 20,500 and 19,100 on the weekly 100 EMA.
Final Thoughts: Will Seasonality Prevail?
While tariff risks have rattled sentiment, history suggests that March through June is one of the strongest seasonal windows for the DAX. The 90% win rate and consistent historical outperformance make this a period worth watching closely. Will seasonal trends override macro fears, or will trade tensions derail the rally?
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Trade risks
Geopolitical tensions and policy changes could impact the outlook for the DAX. Additionally, broader market volatility or shifts in ECB interest rates may weigh on investor confidence.
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