Is the DAX creating a large bearish reversal pattern this week that could send a concerning message to stock bulls in the states? Yes!
This chart of the DAX from Germany reflects that it has spent the majority of the past 7-years inside of a rising channel. The DAX looks to have created a double top last year as it kissed the underside of the rising channel. After the double top, a bearish divergence with the S&P 500 has been taking place.
The bottom of the channel was hit around Christmas, where a counter-trend rally now has it testing the top of the falling channel (1) at (2).
While testing the top of this channel, this week the DAX looks to be creating a “Large Bearish Reversal Pattern” (bearish wick) at (3).
If the DAX is creating a bearish reversal pattern and starts selling off at (3), it would send a concerning message to the bull case for stocks in the states!