Key Support Level in Focus as DAX Tests 15,700 Points
08 August 2023
In today's market analysis, we're going to revisit the DAX. Back at the beginning of August, I had highlighted an Evening Star candlestick pattern forming on the DAX chart. Traditionally, this bearish reversal pattern suggested a move to the downside, and indeed, the DAX price dropped following its appearance.
What's particularly interesting about the current situation is that the DAX is testing a crucial horizontal support level at 15,700 points. This target represented the base-case scenario that emerged from the Evening Star pattern. This 15,700 point level, represented by the orange marker, is significant for more than one reason. Not only does it act as a horizontal support, but it also aligns with a dynamic support represented by the purple line. This line connects higher lows since December 2022, indicating a consistent upward trend in price.
Of course, any substantial price move breaking this support, particularly if the day closes below this level, will generate a potent sell signal. It's a scenario that would call for caution, particularly for those holding long positions.
On the flip side, if the DAX price bounces off this level and forms some kind of bullish reversal pattern, it could present an excellent opportunity to go long. In either case, the 15,700 point level is key to the DAX's future price trajectory, and traders would do well to closely monitor the market's movements around this crucial point.