(Bloomberg) -- Germany’s benchmark DAX Index may fall to about 5,000 if the measure completes a “diamond top” pattern, according to a technical analyst at ING Groep NV who looks at charts to predict future movements. The so-called diamond top pattern, which occurs when an index rallies and pulls back several times in a movement that widens and then narrows again, is being formed in the DAX, Amsterdam-based Roelof-Jan van den Akker said by phone today. The “rare” pattern would be confirmed if the gauge breaks below the lower end of the spectrum, a support line at around 5,300, according to the technical analyst.
The DAX has declined 1.6 percent from this year’s high at 5,557.09 on Aug. 25 and dipped below 5,300 in intraday trading both on Sept. 2 and Sept. 3. Once the pattern is completed “we should see a short-term sharp sell-off,” ING’s Van den Akker said. “The longer-term trend line from March lows is offering support at around 4,970,” he said.
The DAX climbed 1.6 percent to 5,469.56 as of 3:42 p.m. in Frankfurt today. The measure has rallied 49 percent since March 6 as companies worldwide from Goldman Sachs Group Inc. to Bayer AG posted better-than-projected earnings and economic data signaled the global recession is nearing an end. If the DAX was to climb above 5,550 again, the diamond top pattern would disappear, suggesting the index may resume the longer-term uptrend, Van den Akker said.
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