Shooting Star at DAX Resistance
20 February 2024
In today's technical analysis, we'll be focusing on the German DAX index, where early signs suggest a potential bearish correction might be underway. This observation stems from the DAX meeting significant dynamic resistance, being represented by a red line tracing the higher peaks since May. A notable reaction to this resistance has been the formation of a shooting star candlestick pattern, highlighted in green. Such patterns, especially when they occur at resistance levels, are often interpreted as signals for potential short positions.
During the Asian trading session, the DAX continued to move lower, reinforcing the bearish outlook initiated by the shooting star. This movement suggests a continuation of the downward trajectory, presenting an intriguing short-term selling opportunity. The potential target for this bearish movement lies around the blue area, which, if reached, could result in a double top formation. A subsequent breakout below this blue line would not only confirm the bearish scenario but could also signal a robust long-term selling opportunity.
However, this bearish sentiment hinges on current market dynamics and could be invalidated if the DAX were to breach the red dynamic resistance. Such a move would negate the short-term bearish outlook and potentially shift momentum back in favor of the bulls.