Bearish Signal Looms as DAX Tests Head & Shoulders Neckline

A crucial technical battle is unfolding on the DAX, as the index tests a major support level that could determine the mid- to long-term trend.

The area in question is 22,250 points, marked with orange on the chart, which acts as the neckline of a large Head & Shoulders pattern. The pattern itself, highlighted with yellow rectangles, has been in development since mid-February, and is now nearing its critical point.

The first bearish warning was already flashed earlier, when the DAX broke the green uptrend line, which had been supporting the price for weeks. That breakdown triggered increased selling pressure and accelerated the downward movement. Now, all eyes are on the neckline.

A daily close below 22,250 would confirm the Head & Shoulders pattern and trigger a strong long-term sell signal, opening the door to a more extended correction or even a trend reversal.

On the flip side, a bullish defense of the neckline, especially with a sharp intraday reversal and a close well above this level, would invalidate the bearish setup and create a compelling V-shaped reversal pattern. That would be a powerful signal to go long, especially if accompanied by strong volume and positive momentum indicators.

Source: https://www.axiory.com/analytics/technical-analysis/bearish-signal-looms-as-dax-tests-head-shoulders-n