DAX 30 Creates Rising Wedge Reversal Chart Pattern

Technical analysis of Forex market

The German index DAX 30 is building a rising wedge reversal chart pattern (purple lines). The uptrend is losing steam and larger retracement is around the corner. What could confirm this bearish pullback?

Price Charts and Technical Analysis

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The DAX 30 seems to have completed a 5 wave (pink) of a potential wave 3 (purple). The bulls, however, are struggling to push higher. The recent break below the 21 ema zone is a first warning signal. A candle close below the 144 ema could confirm an immediate bearish breakout towards the 23.6% Fibonacci retracement level. But keep in mind that a bullish candle could still send the DAX higher to test the head and shoulders pattern (red boxes) first. A break of the top invalidates the retracement outlook (red x).

The DAX was using the 21 ema zone as a support area until recently. Now price has broken below the zone and also used it once as a resistance. A candle close in the red box could confirm a reversal breakout and potential continuation within the wave C (pink). Main target is the 23.6% Fib at the moment because the pullback could be part of a larger wave 4 (purple).