It is time to take profits. Some investors may wish. But the party is not over yet. Why, I’ll show you right away. We’re looking again at the exaggerations. The DAX is clearly overbought. But that’s not unusual after such a rally.

But often enough, the supposed end is not as soon as some think. We definitely have theoretically room to go up. See for yourself.

DAX in daily chart with all-time high 2023 You know the red dots as regular readers. That’s the end of a buying panic. We had it twice now and it went up. The red dots are usually not a signal for an exit. Nor for a short entry. Why do I use them then?

(Source: Tradingview.com)

What I have seen over and over again in the past: After a red dot, the prices go up even further. The RSI, however, does not last long, if at all.

But now we have an extraordinary situation: The DAX continues to explode after 2 red dots – and the RSI too! Such a thing never happens. I found something vaguely comparable in 2017. The DAX went up another 9 percent after two red dots!

The RSI fell back at the time. Are we really entering new territory here and is the current situation unpredictable?

In a way, yes. In the charts of the DAX that I showed above, I found nothing in the last years where the RSI runs up like this.

The rally continues As an argument against, which also shows the unclear situation, I looked at the Xetra courses. There we still don’t have an end of a buying panic in the chart. Not a single red dot according to the indicator. However, we are working on it, because the RSI’s courses come back a bit. Maybe we can draw a better picture of the DAX and guess how it will behave in the next few weeks with the Xetra chart.

The same applies here as described above: After a red dot in the chart (the end of a buying panic) the RSI falls and the DAX climbs a bit further before a consolidation takes place.

Conclusion That the DAX is still expanding its yearly high is probably true. The RSI is in overbought territory, but that usually doesn’t stop the prices from going up even further. Even or especially if the RSI falls. There is still plenty of room up to 17,000 points this year. Let’s see how high the DAX wants to go.