DAX – Key Resistance Test Underway

DAX – Key Resistance Test Underway
Today we focus on the DAX, which is currently undergoing a critical recovery test after last week's sharp decline.

The German index is now retesting a major horizontal resistance level at 23,930 points, marked in blue. This area previously acted as a key support throughout the second half of July and was broken on August 1st, triggering a mid-term sell signal.

Now, with price pushing back toward this zone, we’re seeing the classic retest behavior:

  • Former support acting as resistance.
     

On the H4 chart, the first contact with this level has been rejected, leaving a long upper wick on the current candle — a clear sign of selling pressure.

This candle, currently developing, is marked with a yellow rectangle and could end as a shooting star, a bearish reversal pattern. However, confirmation is key — we need to wait for the candle to close before acting.

Trading Scenarios:

  • Bearish scenario:
    If the candle closes as a shooting star or another bearish signal, this will act as a confirmation to go short, expecting another leg down.
     

Bullish scenario:
If the price closes a full daily candle above 23,930, that would indicate a false breakdown in early August, and a proper signal to go long as buyers reclaim control.
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