Monday, June 8, 2015

DAX Daily Chart Germany Enters -10% Correction Territory

The DAX drops under 11160 intraday Friday and in Monday's trade is currently down 56 points, -0.5%, to 11140. This price action tags a -10% correction for Germany. The 12400 top occurs in April so 1240 points lower (-10%) is 11160. The ECB QE program continues but the DAX is going the wrong way. The DAX rocket launched last October from 8500 to 12400 in April of this year, +46% in seven months.

The brown H&S pattern with head at 12400 and neck line at 11750-ish, targets 11K. Price teased lower in May but bounced on happy central banker talk so the DAX may be coming back down for unfinished business at 11K. The indicators are a mixed bag so a recovery bounce is on the table. The RSI is not oversold so price may want to play around in that 10.7K-11.0K congestion zone in the weeks and months ahead. The purple lines show another H&S-like pattern with head at 12400 and neckline at 11250 which would target 10.1K and the neck line is currently ruptured. The 200-day MA is  sloping higher which is bullish.

The ongoing ECB QE program into September 2016 is also bullish for European stocks. The odd thing about Europe's QE which Keystone pointed out months ago, is that the European stock indexes were already at or near record highs when QE started. This is different than in the States and in Japan where their respective indexes were beaten down and had plenty of room to run on the Fed and BOJ QE easy money pumps. The ADX shows that the strong uptrend in February and March ended in April. The downward price action is not yet a strong downtrend which makes the DAX bulls happy but if the ADX rises into the pink box in the right margin the downside will become far more substantive. The DAX may stagger sideways from here. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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