Two Germans at Play

• Posted by Greg Harmon
• on May 13th, 2014

The German market has been on my radar since last October. It had a great run higher then ran into the same consolidation that the S&P 500 has been experiencing. We tried it higher a couple times, from the green circles for small moves only to see it stall out. But the 5 month consolidation is now producing an Inverse Head and Shoulders pattern. You can see it on the chart of the German DAX, $DAX, below. With the neckline at 9725 a break higher carries a price objective to at least 10,550. That is worth a beer and a pretzel or two. The RSI and MACD both support a move higher and the recent short term break out targets 9840, which could get that big trigger going.

Oddly, the German ETF, $EWG, does not have the same Inverse Head and Shoulders Pattern, but is equally attractive , if you do not trade futures. The chart below shows an ascending triangle with a target of 34.20 on a break above 31.75. It also has a favorable RSI and MACD. Take your pick as to which one you like.

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