The top is in for equities

EURUSD bullish as long as it holds above 1.0820
March 15, 2016
Gold could see $1,150-$1,100 over the coming weeks.
March 21, 2016

European equity indices did not follow the late rally by US indices yesterday after the FOMC. This was the first clue of what could follow today. After a short-term trading above 10k DAX has broken below 9900 and has started a reversal increasing the chances that a top is in. Not forgetting the triple witching tomorrow markets usually make important tops or bottoms around that date.

dax

Price continues to trade inside the upward sloping channel but the entire rise is not impulsive. Price also got rejected at the upped channel boundary and will at least test the lower boundary near 9600. Stochastic oscillator is oversold.

DAX2

In the daily chart above we see DAX being rejected at the 50% Fibonacci retracement  and at the upper cloud boundary of the Kumo (cloud).

S&P DJIA and NASDAQ have also reached important resistance levels and the entire rise from mid February reminds me of the rally of last October-November. We all know what followed next.

dowdaily NASDAQ SPXD

RUSSELL 2000 on the other hand was not as happy as the other indices in the last couple of sessions. RUT is back testing important resistance levels. The neckline so far has rejected price and this is a bearish sign.

RUTWEEKLY RUT

Finally but not least, the FTSE100 struggles around the important downward sloping trend line resistance. As I explained in a separate post, I’m bearish this index for a push towards previous lows at least.

FTSE100

Concluding, already after today’s open equity indices are in red and show important reversal signs. A lower high and reversal at current levels will be an important bearish sign as this will be a second lower high after the top made in November. Equity markets are in turbulent waters and traders should be very cautious. Is this the start of a new bear market? One thing is for sure, November and last March-April highs are of great importance for the longer-term of the markets.

Thank you for taking the time to catch up on my thinking.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.