While the US markets form Higher Highs and record closes, the European markets do not follow (yet).
For example, the DAX is forming Lower Highs and Lower Lows since the most recent 70 day cycle (May 8, click here). So investors (or should I say, the Plunge Protection Teams) are pulling money out of Europe and into US equities.
Let’s take a closer look at the DAX
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DAX 4H CHART
Most equity markets sold off when Comey was fired and while the US markets recovered from that one day sell off, the EU markets have not.
After the sell off, the DAX formed a flag pattern (continuation pattern) and yesterday it broke the flag to the downside, after which the attempt to close above failed so far. As long as it is not able to close above 12.650, it would make sense to see Bears take further control and direct it to the 12.500 key area.
A break below 12.500 opens the door to retest 12.000.
A break above 12.650 is considered bullish and opens the door to the 12.720-12.800 area.
Key Levels to keep an eye on for further direction:
Upside: 12.650 and Downside: 12.500
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