DAX Germany Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

It is not looking good for the Deutschland. The red lines show universal negative divergence creating the spankdown off the top over the last few weeks and that would be expected to continue. The MACD line tries to muster up some strength but at most it may delay the top for a month or so.

The red rising wedge pattern is ominous, especially if it falls below the lower trend line. The collapses from rising wedges can be quite dramatic. Price is extended above the moving averages requiring a mean reversion lower. The upper band was violated so the middle band at 11670 is on the table.

The downside trend was strong into 2009 but that petered out as the ADX purple box shows. As the DAX rallied into 2014, the ADX showed that the upside trend was strong and sustainable, but alas, the strong trend higher ended in late 2015. The ADX is down at 21 showing that the trend higher in German stocks is not strong anymore. German bulls will need the ADX to move into that purple box before they are happy.

The chart is sick, one of the most ill ones among the world's major indexes. The multi-month top is in for Germany and these prices may not be seen for months and years ahead. The November top may hold if not, price will probably not make it much higher in January or February and that will be the multi-month top.

Taking a look at EWG, the German ETF, the chart is similar to the DAX but clearly shows more momentum since many traders expect Europe's powerhouse to continue outperforming. The DAX chart above is sick looking and indicates that Germany will have a very ill year ahead. 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.