1st July 1997. The DAX made a all time high RSI value of 92.98.
Ever since each high the DAX has made has had a price high whilst the RSI being considerably lower.
Ever so recently the DAX Made a double top with a lower histogram on the MACD indicator suggesting that momentum has slowed. With divergences on such a wider timeframe this usually means a change in momentum for quiet some time. MACD histogram being one of the strongest signals one can rely on. This suggest that the price of DAX index may suffer as the US economy heads into a recession. Germany already suffered from 3 consecutive quarters of Negative GDP Growth.
If this chart is correct and it is expected that the DAX will suffer further decline then a interesting comparison would be to compare the DAX/SPY to see if it is expected to overperform as a comparison.
Upon analyzing this comparison it has come to my attention that recently the DAX/SPY had bounce of the standard 2 deviation from its long term regression trend. As seen here.
More to my attention it currently has retraced to the local 0.5 Fibonacci Retracement Level
If it does not find support hear and follow through on its inverse H&S pattern due to US seasonality in markets it may just find support on its 2nd Standard deviation and still form a little less obvious H&S.
A recent example of this pattern was displayed in another major indices. The Nikkei 225.
However this comparison inclining was a result of the Nikkei inclining I do not expect the DAX/SPY comparison reverting to its mean as a result of this. Due to macro economic factors of less GDP expected for Germany and a slow down in the US Economy.
It may be expected that the DAX touches its second standard deviation one last time before the end of this market downturn. Which may lead to another yet but 25% retracement.
Ever since each high the DAX has made has had a price high whilst the RSI being considerably lower.
Ever so recently the DAX Made a double top with a lower histogram on the MACD indicator suggesting that momentum has slowed. With divergences on such a wider timeframe this usually means a change in momentum for quiet some time. MACD histogram being one of the strongest signals one can rely on. This suggest that the price of DAX index may suffer as the US economy heads into a recession. Germany already suffered from 3 consecutive quarters of Negative GDP Growth.
If this chart is correct and it is expected that the DAX will suffer further decline then a interesting comparison would be to compare the DAX/SPY to see if it is expected to overperform as a comparison.
Upon analyzing this comparison it has come to my attention that recently the DAX/SPY had bounce of the standard 2 deviation from its long term regression trend. As seen here.
A recent example of this pattern was displayed in another major indices. The Nikkei 225.
It may be expected that the DAX touches its second standard deviation one last time before the end of this market downturn. Which may lead to another yet but 25% retracement.
Nikkei 225-