Thursday, July 21, 2016 11:20 AM EDT
The German DAX, the leading index of the German stock market, is back at its level of 2 years ago. In other words, it has gone nowhere. Admittedly, last year it rallied strongly in Q1 and Q2, but since then, it engaged in a pattern of lower highs.
The German index is now trading in a narrow range between 9,200 and 10,200 points. However, as the chart suggests, it is decision time right now. The trendline which connects the highs since last summer is now touching the important 10,000-line. Both trendlines have formed a triangle pattern. There is certainly predictive value in such a pattern, as we have seen many times in the past.
In our own words, the DAX index is about to start trending, either higher or lower. Given the secular breakout of the U.S. stock market and the bullish sentiment that our risk indicators are signaling, we would expect that German stocks will soon break out. The key (breakout) level to watch is 10,200 points.
(Click on image to enlarge)
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