The DAX has experienced considerable selling pressure following the implementation of 25% tariffs on auto imports. Currently, the index has fallen over 6% from its all-time highs and is approaching a critical trendline.
Buyers may enter the market with defined risks beneath this trendline, while sellers could aim for a downward break targeting the next major trendline at approximately 21,000.
Global Market Sentiment Weakens
The negative sentiment driven by tariffs is affecting global equity markets broadly. If US indices continue to decline, it is improbable that global markets will experience upward movement.
April 2 will be a key date for all markets.
Tariffs on auto imports introduced at a 25% rate have sparked a wave of selling in the DAX, pushing the index down by more than 6% from its record high. It’s now edging towards a trendline that many technically minded participants are watching closely. This kind of market behaviour—where a single policy action catalyses a wider move—can often create sharp repositioning among derivatives traders, especially those managing short-term risk.
The suggestion that fresh buying may occur just below this key trendline implies a technical level of interest, possibly stemming from previous support zones where market participants have historically reacted. This reaction area isn’t arbitrary either. It often coincides with areas of high traded volume or prior breakout levels, which can draw in trading algorithms as well as discretionary flows.
Sellers, on the other hand, appear comfortable operating under the assumption that once that zone is lost, the market could accelerate lower towards a secondary trendline near the 21,000 mark. That lower region aligns with longer-term price structures, indicating it’s not just speculative chatter but supported by visible chart levels.
Volatility And Positioning Into April
Market pressure from the tariff decision has spread outwards, catching other equity markets in the ripple. European equities are not alone. US benchmarks are also moving south, feeding into a more general loss of confidence. Historically, when US indices struggle to find a base, markets elsewhere tend to mirror the behaviour rather than buck the direction. This makes intuitive sense: large institutional portfolios are often globally allocated, meaning derisking in one region can lead to parallel moves elsewhere.
April 2nd features as a calendar event not because of seasonality or historical patterns, but likely due to scheduled economic data or possible policy announcements. Participants don’t need to speculate why it matters—enough people expect action or volatility around then to make positioning into that date sensitive.
In this environment, we’ve generally seen lower timeframes become more important, particularly for those managing gamma risk. When broader drivers become more binary—as policy moves often are—volatility builds, and smaller time horizons take on outsized relevance. In plain terms, less emphasis is placed on long-term macro themes day-to-day, and more importance is given to immediate price zones and headline reaction.
For now, the move downward has been orderly rather than panicked, which may encourage option sellers to re-engage. However, with headline volatility still elevated, skew remains expensive—a reminder that downside demand isn’t subsiding yet. Any rebalancing of large options books around quarter start could drive short-term dislocations, especially if underlying equity volumes remain light.
Long option holders, particularly those holding puts struck just below the declining support line, may find increasing time value as implied volatility builds. That said, without directional follow-through, the premium may decay quickly. Risk-taking needs to be defined and strictly weighted here; we’ve seen before how quickly these levels break when conditioning changes.
Sentiment still swings closely with macro catalysts. As long as major indices abroad continue to test fresh lows, we find little reason to believe that synthetic exposure on smaller bourses will stabilise independently. For now, the short gamma crowd remains active, and that generally means movement will continue.
