Sticking fork in the German DAX

• Posted by Greg Harmon
• on September 23rd, 2015

First, to all my Jewish friends that are fasting today, I apologize. But I would rather put my fork into more German potato salad than into the German DAX. Doesn’t it look good? A nice big bowl with some sausages along side? How can you go wrong? How is this relevant?

The German DAX Composite ($DAX, $EWG) has a fork in it. The chart below shows the Andrew’s Pitchfork off of the high made back in April. The market was just getting ready to soar this time last year. But since that high it retraced 75% of the move up with the low print in August.

Which brings us to this Pitchfork. the Pitchfork tool is a good trend identification tool. but it also can be used to identify a trade reversal or when to press the accelerator. The blue Pitchfork clearly shows the downtrend since April. After the bounce in July the Composite has settled back at the Lower Median Line of the Pitchfork. A break of that line is significant, like at the August low and Monday.

A break of the Lower Median Line puts the Composite on Watch to press the accelerator to the downside. The trigger is the dotted red line. It is the Hagopian Trigger Line, and what to watch now. A break of the trigger Line is the signal to press the bet lower. But like anything in the market it is not a guarantee. As was shown in August when the Composite broke the Trigger Line but then was quickly bought up. As I write the DAX is bouncing at mid day in Germany and still well above that trigger Line. Still a short but not a disaster yet.

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