FTSE 100

Big fall from 7700 - (looks like many shorts stopped out, and bull trap ) with the subsequent collapse.  Now a corrective rally up to the shaded red area and now turning down.

Likely - new lows coming - but watch RSI - could be setting up for positive divergence and a short to medium-term rally before the next leg down.

ALT:  market keeps going lower and medium-term correction underway.

DOW - ending diagonal?

Dow daily chart

The trading recently (a year) has been very volatile - one moment looks like sustained rally, the next looks like a sustained fall.  So looked through books and online charts.
could be we are forming an ending diagonal

So, the fall in December 2018 could have been the end of the larger 4th wave, and now we are in some "ending diagonal" full of 3 wave moves.  This doesn't look complete - which allows for a new high - which also ties in with the lower rates scenario and this in turn, will mean a shift in assets to "risk" - for the wrong reasons - so the latecomers to the 10 years plus bull market.

Dax weekly and daily

This was the weekly chart posted previously

here is the weekly to date

Sows the break of the uptrend since December 2018
Found support at the 200-week moving average

rally to test the trend line - a break above and the bull move higher probability
a failed rally to the trend line - a test of the lows  and possible bear move
a failure short of the trend line, the higher probability that the bear move is stronger

DAILY

arrows show various scenarios

keep an eye on levels 

Bounce back - what next

The bounce-back - now what?
Technically: markets were oversold, the fall overnight, when the Dow futures were down by 600 points, was low participation and by the time Europe opened the relief rally was underway.
2000 points loss on the dow in less than a week.

some charts and possible paths for the rally
WATCH THE VOLUME ON THE BOUNCE - LOW VOLUME WILL BE A WARNING THAT ALL IS NOT RIGHT!!

DOW daily
The fall overnight pierced the 200 DMA - for some that is a KEY LEVEL, so it looks like the PPT may have stepped in to prevent a crash on Tuesday morning
so a stick save - but where to now?
The "managed" fall tagged the lower upper trend line - so if the bull trend is in force then the rally should head to the upper trend line if this rally is only a correction of this fall likely target is 62 % retrace (marked in red)

Nasdaq daily

Looks like the fall also tagged the rising trend line so BULL market still intact

However, the fall was characterised by a few gaps down so it is possible that an attempt to fill the gaps will happen.

marked on chart at 7640

Another LONG term chart - headline index the Dow Jones Industrial index

The DJIA is a narrow index but it is the headline index - for the major news outlets.
The monthly chart shows negative divergence between Price and RSI
Since Jan 2018  the market has tried 3 times to break to new highs -
so this can be a consolidation (as in minor bear move, followed by new highs) or a topping formation (as in major bear market)

Who knows which it will be?
keep eye on levels 27650 and 24500 - short term.
breaking 24500 targets the December 2018 lows
breaking the highs could see a fast move higher

as always there are various scenarios - depends on your time frames, and style of trading

Jack be nimble....

Wow - some overnight moves - sometimes it pays to stay up a little longer when markets are like this.

So overnight it looks like there was a mini capitulation of sellers (see chart) - and a subsequent short-covering rally.

So now where?
The drop tagged the 78.6 % Fibonacci retracement level, and rallied 600  points - these markets are NOT for the faint-hearted- hence the title of the post -
1. this fall may mean more to come medium-term
2. snapback rallies can go further than one might think.

Strategy
keep an eye on key levels for buy/sell opportunities
if trading intraday - be vigilant - and manage risk
best strategy is to wait for key levels

How CNBC are permanent bulls

watching CNBC for a laugh - as when markets fall they are like headless chickens.
I'm sure that he says "Nasdaq is up 3.5%" 

Longer term view Nasdaq

So although the sell-off at the end of the last week will be blamed on Trump tweets, in reality, news usually doesn't matter in the medium term.  so where next for the markets?

We can't predict this, but we can look at various scenarios, and assign a probability to them.

Nasdaq weekly chart

Technically - the negative divergence between price and RSI (price making new highs - RSI not) - usually a negative sign for the market
The bull market has lasted over 10 years to date

What are the scenarios?

1.  This fall is the start of a correction of the December 208 rally to new highs.  looking at Fib retracements 62 % is quite common but the correction could stop earlier than that.
This is the most BULLISH scenario - supported by uptrend still intact, interest rate outlook conducive to more risk.
2  The recent fall is the start of the Trump rally correction - this would be a deeper fall and targeting the lows in December

3 The bull market is ended and the correction/bear market will correct the rally from 2008

Scenario 1 is more likely at present; low-interest rates, an election year in USA 2020,; however if the falls become more pronounced or a rally fails to exceed the recent ATH - then should be on the look out for deeper corrections.

A quick look at the daily charts also shows the negative divergence.

DAX - long term view

So the markets have had some wild gyrations in recent weeks - seems to be a TWEET based market

so sometimes it is beneficial to take a step back to a LONGER time frame - in this case, the weekly DAX chart, shown below

 Can't See the Forest for the Trees!

This is  a LONG term chart

Head and shoulders formations don't always complete

However, today's move looks like the start of the right shoulder shaded blue area

MACD crossover imminent 

The target, if it breaks the neckline,  COINCIDES with te LONG term uptrend

Remember markets have been pumped by easy money, investors looking for return when rates are at all-time lows in most developed economies.  Central bankers and governments trying to keep the illusion of growth going.  The emperor's new clothes  - 21st Century style!