German DAX: False Breakout Sets Stage for Bearish Continuation

In today’s technical analysis, let’s take a closer look at the German DAX, which had a very turbulent end to the previous week. The index suffered heavily on Friday, with strong selling pressure that dragged prices sharply lower. However, Monday brought some signs of life — a bullish gap at the open and a small upward candle hinted that buyers were trying to step in and initiate a rebound. Unfortunately, as we approach the European session on Tuesday, that rebound is already starting to lose momentum, and the current candle looks increasingly bearish.

From the technical point of view, all the recent moves are still happening inside a large sideways range, clearly visible as a rectangle pattern on the chart. This consolidation zone has been controlling the market for several weeks, defining both upper resistance and lower support levels that traders keep respecting. Interestingly, the most recent downswing actually started with a false breakout above the upper boundary of this rectangle — marked with an orange area on the chart. Buyers tried to push higher, but that attempt quickly failed, trapping many long positions and triggering a swift reversal to the downside.

Given this false breakout setup, the market logic now suggests that the DAX will likely move toward the opposite edge of the range — the lower boundary of the rectangle. This would mean a period of continued bearish pressure, possibly lasting for several days or even weeks, until price reaches the next strong demand zone. For now, as long as the DAX remains below the upper resistance of this consolidation, the sentiment is leaning bearish, and traders should be cautious with any attempts to buy the dips until a clearer bullish signal appears.

Source: https://www.axiory.com/analytics/technical-analysis/german-dax-false-breakout-sets-stage-for-bearish-c