I know this is a depressing suggestion — that equities could lose 70% or more of their current value. If you entered the market after the 2008 crisis, you have only known 17 years of growth. I do not blame you if this idea sounds unthinkable and I hope that I am wrong, but I think this setup is technically credible. It matches the mechanics I have seen across different markets and timeframes. For reference, see my similar idea "Later, Bitcoin!", which played out exactly as expected.
Technicals
The overall trend is still bullish, but because the 2020 pullback failed to fully reset the market, it has advanced in what I consider an unsustainable way. That has created a divergence between price and momentum, visible in RSI. From a pitchfork perspective, price tends to gravitate toward the next median line, where it can stall, break through, or reverse. The DAX has already hesitated around the middle line several times, and with the trend barrier now broken, I think a reversal may begin once we bid farewell to the nearby supply zone.
Once the decline starts, I expect price to at least reach the dotted line of the crosswind channel through what I call a nostalgia retracement — a return to old, broken, downsloping structures that often occurs before the trend resumes. In my experience, where horizontal support intersects with downsloping structures often becomes an attraction point for price. On the linear chart, I see the next meaningful support around 3,800.
Macro backdrop
The global fiat system, built on debt expansion and growing liquidity, can support rising asset prices for a long time — but that does not mean bubbles cannot burst. Germany has already been losing momentum, and the country’s 2026 growth forecast was just cut to 0.5% while inflation expectations were revised higher as rising energy costs weigh on the economy. That matters for the DAX because Germany remains highly exposed to industrial and energy-sensitive sectors.
Now add the war involving the U.S., Israel, and Iran. Major forecasters including the IEA have warned that the conflict has already disrupted oil supply, driven up energy prices, and worsened the global growth outlook. In that kind of environment, stagflation risk rises and both households and investors are forced to prioritize essentials like fuel and food over risk assets.
As for timing, the yield curve adds another warning signal. Historically, inversions have often preceded recessions, and normalization after inversion has frequently happened close to the downturn rather than far ahead of it. I do not treat that as a fixed rule, but in the current backdrop it adds to the view that the macro picture is fragile rather than supportive.
Technicals
The overall trend is still bullish, but because the 2020 pullback failed to fully reset the market, it has advanced in what I consider an unsustainable way. That has created a divergence between price and momentum, visible in RSI. From a pitchfork perspective, price tends to gravitate toward the next median line, where it can stall, break through, or reverse. The DAX has already hesitated around the middle line several times, and with the trend barrier now broken, I think a reversal may begin once we bid farewell to the nearby supply zone.
Once the decline starts, I expect price to at least reach the dotted line of the crosswind channel through what I call a nostalgia retracement — a return to old, broken, downsloping structures that often occurs before the trend resumes. In my experience, where horizontal support intersects with downsloping structures often becomes an attraction point for price. On the linear chart, I see the next meaningful support around 3,800.
Macro backdrop
The global fiat system, built on debt expansion and growing liquidity, can support rising asset prices for a long time — but that does not mean bubbles cannot burst. Germany has already been losing momentum, and the country’s 2026 growth forecast was just cut to 0.5% while inflation expectations were revised higher as rising energy costs weigh on the economy. That matters for the DAX because Germany remains highly exposed to industrial and energy-sensitive sectors.
Now add the war involving the U.S., Israel, and Iran. Major forecasters including the IEA have warned that the conflict has already disrupted oil supply, driven up energy prices, and worsened the global growth outlook. In that kind of environment, stagflation risk rises and both households and investors are forced to prioritize essentials like fuel and food over risk assets.
As for timing, the yield curve adds another warning signal. Historically, inversions have often preceded recessions, and normalization after inversion has frequently happened close to the downturn rather than far ahead of it. I do not treat that as a fixed rule, but in the current backdrop it adds to the view that the macro picture is fragile rather than supportive.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.