It is intriguing to keep a tab of the financial markets, specially in these changing times. Financial instruments exhibit unique behavior every now and then. Post the US Elections in November 2016, global stocks have soared multi-fold. There are theories on at what stage will it be too high for indices to start reversing. Or is it going to be just an upward march for ever?
It seems though that the former theory is starting to play out. Indices cannot sustain the current extended bullishness. Let us take a closer look at the German Index DAX for instance.
Here's a long term view on weekly chart for DAX. Up until last week (mid-march) prices aligned within a steep ascending wedge formation. As if DAX would soon touch all time highs at 12422 reached earlier in April 2015.
The week starting 20th March 2016, though is in far red up until Thursday. To the point that we might be seeing early signs of plummeting index. This case is strengthened by the fact that the behavior is shown across other major indices like UK FTSE, US S&P 500 and so on.
Taking much shorter term look into technicals, here we have now an hourly chart for DAX. See how the prices breached bottom upward channel line on 21st March. It reached until very recent demand zone of last February (circular region) and started to reverse. DAX will likely continue to traverse side-ways within a very narrow range for next few days. Post this, as driven by various fundamental factors, data releases as well as interconnected global factors, we can expect some big moves.
This should be consistent across other basket stocks / index, if not for the individual stocks. Good luck with defining trading strategies based on enhanced understanding. Happy trading!