The DAX index appears to be forming a Bearish Crab pattern, which typically entails likely bearish reversals. This is strong enough confirmation of the aforementioned bearish sentiment, but there is more.
Provided that the price action reaches point D at around 15900.000, this would create perfect selling conditions. Moreover, the peak of the Crab pattern would be situated close to the psychologically significant resistance level at 16000.000, which in itself serves as a major turning point.
Even though the index is expected to appreciate by an additional 300-400 basis points before such a reversal takes place, bears should keep an eye on the immediate behaviour of the price action.
The Stochastic RSI indicator is already threading in its overbought extreme, which could incite more selling pressure in the near future. Moreover, the price action is currently testing the historic resistance level at 15500.000. Given that the index has never been able to penetrate this threshold decisively in the past, a reversal from the current market price seems highly probable.
On the other hand, the latest upswing was initiated as a Marubozu engulfing candle that rebounded from the psychological support at 15000.000. The latter was also able to break out above the 50-day MA (in green) and the 100-day MA (in blue), both of which were serving as floating resistances at the time. This confirms the strength of the bullish pressure in the short term.
Provided that the price action reaches point D at around 15900.000, this would create perfect selling conditions. Moreover, the peak of the Crab pattern would be situated close to the psychologically significant resistance level at 16000.000, which in itself serves as a major turning point.
Even though the index is expected to appreciate by an additional 300-400 basis points before such a reversal takes place, bears should keep an eye on the immediate behaviour of the price action.
The Stochastic RSI indicator is already threading in its overbought extreme, which could incite more selling pressure in the near future. Moreover, the price action is currently testing the historic resistance level at 15500.000. Given that the index has never been able to penetrate this threshold decisively in the past, a reversal from the current market price seems highly probable.
On the other hand, the latest upswing was initiated as a Marubozu engulfing candle that rebounded from the psychological support at 15000.000. The latter was also able to break out above the 50-day MA (in green) and the 100-day MA (in blue), both of which were serving as floating resistances at the time. This confirms the strength of the bullish pressure in the short term.