The German DAX index is currently trading at around 15700.00 basis points, which represents its all-time high. The underlying rally was fuelled by solid industry numbers in Germany for the month of May, which inspired investors to believe that the digitalisation process of the Eurozone economy is going according to plan.
While there are strong indications to confirm this, the underlying recovery in the Euro Area continues at an uneven pace. The German economic sentiment index surprisingly fell in June, which underpins this discrepancy. All of this would likely weigh down on the DAX index, just ahead of the upcoming ECB meeting in Frankfurt.
As can be seen on the daily chart below, a new bearish correction is expected to occur from the latest all-time high. This is further substantiated by the fact that the price action appears to be forming an Ascending Wedge pattern, which is typically taken to signify mounting bearish bias.
The price action managed to break out above the semi-psychological resistance level at 15500.00 only recently, which does not preclude the possibility for the emergence of a snap reversal below it. On the other hand, the price action could also appreciate towards the next psychological resistance level at 16000.00 before such a correction takes place. This would complete the Ascending Wedge pattern.
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