the German DAX 30 index is testing a critical support zone (blue lines) because price has made a retracement back to the top of wave 1 (purple). A bearish breakout indicates a larger reversal but a bounce could keep the uptrend alive.
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Depending on the reaction of the German index DAX 30 at the support zone, price will either be in a bullish wave 4-5 (purple) pattern or in a bearish trend after completing a bullish ABC (red) zigzag.
The DAX 30 is now also testing a key 50% Fibonacci retracement level of wave 4 vs 3. Price could be completing a bearish ABC (blue) pattern but a bullish bounce will still need to break above the resistance trend line (red) before an uptrend continuation is confirmed. A bearish breakout however would invalidate the current bullish wave pattern and make a bearish 123 pattern more likely.
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