DAX Germany Daily Chart Bear Market Drop Positive Divergence Potential Island Reversal

The H&S from April thru July, that pointed to the cliff neckline at 7000, is shown in blue. The 6100 target was easily achieved and price simply kept on collapsing.  The red line at 6000 shows the -20% threshold that identifies the DAX now in a bear market correction. The overall drop from 7600 to 5200 is -32%!  The DAX lost one-third of its value in eight short weeks, always amazing how stocks can fall so quickly.  The falling wedge, oversold conditions and positive divergence bounced price off the bottom. Note the island that is now created (blue circle) so watch for an island reversal that can jump price from 5400 to 5500 in a heartbeat.

At the least, the gap at 5400-5500 will be filled.  The indicators are now showing a long and strong profile (green lines) so further upside is expected over the near term. The 20 MA at 5600 is a magnet target as well, also a gap fill at 5700 is available for filling.  Thus, over the short term, further upside is expected, either an island reversal jump to 5600 quickly, or a steady eddy move up to fill the gap at 5500, then test the 20 MA then perhaps the 5700 gap fill. Projection is upside to 5500-5700. Overall, the intermediate and longer term picture remains weak with 5000 and 4500 expected but for the short term, the wine will flow and some short term happiness will bolster price. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.