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Germany’s DAX index remains very important on the global stage. The DAX index remains inside of rising channel, that has been in play over the past 5-years. Last year the DAX hit the top of the rising channel at (1) and then it started heading lower.
The weakness in the DAX was followed by weakness in the S&P 500, over the next 9-months. The decline since April of last year by the DAX, took it down to rising channel support and a small bounce has taken place the past few weeks.
Now the DAX is testing falling resistance at (2). The DAX remains a leader and what it does at falling resistance, should have a big influence over the S&P 500 going forward. If the DAX breaks resistance at (2), one should expect to see the S&P move higher as well. If the DAX turns south and breaks dual rising support, S&P 500 could follow this movement as well.
The 9-month trend remains down in the DAX (lower highs and lower lows). Keep your eye on this leader, as it is testing key falling resistance. Should solid breakout take place, it could influence prices through early summer. This is an important test by leadership friends!!!