Can the 14,700 support hold the key for DAX?

DAX finds itself at a crossroads today. Positioned at an undeniably pivotal juncture, the index currently oscillates around a significant horizontal support of 14,700 points, vividly highlighted by an orange line. Casting a glance back in time, this level has repeatedly demonstrated its prominence. Not only did it serve as a resistance toward the close of last year, but it also morphed into a support in March, standing firm as the bulls and bears tussled for dominance. Moreover, this isn’t just any ordinary support. It coincides perfectly with the 38.2% Fibonacci retracement level, underscoring its vital importance in the grander scheme of things.

Yesterday's trading session provided a glimpse into the potential of this support. The bears, in a bid to push the index further south, were thwarted in their endeavors, leading to a bounce off this crucial level. The end result? A doji candle, one that traditionally signals indecision but offers a glimmer of hope for those bullish on DAX. But to truly understand the current scenario, one must zoom out and analyze the broader landscape. Until recently, the downward movement was comfortably nestled within a wedge pattern, demarcated by black lines. However, the past week witnessed a breach, with prices slicing through the lower boundary of this pattern. This shift is a glaring testament to the mounting bearish pressure, and it's clear that the bulls are in a tight spot.

For those mulling over trading strategies, here's the lowdown: a robust bounce from this level, accompanied by substantial volume and a strong bullish candle, could act as a green light for a long position. Conversely, if the price were to shatter the orange support and close beneath it, it would not only be a bearish signal but potentially the proverbial 'writing on the wall' for DAX's bullish prospects.