Economic crisis imminent based only on technical indicators
Most people researching the subject know that the US economy becomes weaker everyday fundamentaly as the American debt has grown to unsustainable levels and recently fed started raising the interest rates, a classic move taken before an economic collapse.Recently a yield curve inversion happened which is considered to be a predictor of economic recession.In this publication i will only provide my opinion on why an economic recession is imminent based only on technical indicators.
January 1rst 2018 Dow Jones did an all time high in points and RSI(relative strength index) and this was the first time in the history of Dow Jones that the RSI indicator reached such and overbought condition.In October Dow created a new all time high points(could be considered a double top too) wise but the rsi indicator failed to keep up,that is a classic bearish divergence which as expected resulted in one of the biggest drops Dow has seen in its entire history.
Today Dow is close at reaching its all time high but the RSI indicator is even lower than it was a few months back,again we can see a bearish divirgence but this time the momentum indicator on the weekly chart is at its all time highs too.
I would also like to point out that the RSI indicator today has almost identical movement as it had in the crisis of 2007-2008 and is much alike to 2001-2002 recession.Before the crisis of 2008 we had an 15% drop while this december we saw an 18% drop and the rsi indicators moved exactly the same way.
In conclusion i believe that a recession can happen in a few months months but it could also take a lot more time, even if we dont see a full recession in action my opinion is that all these bearish divergences should result in a sharp drop soon enough and shorting the market right now could provide big profits to the bears.
January 1rst 2018 Dow Jones did an all time high in points and RSI(relative strength index) and this was the first time in the history of Dow Jones that the RSI indicator reached such and overbought condition.In October Dow created a new all time high points(could be considered a double top too) wise but the rsi indicator failed to keep up,that is a classic bearish divergence which as expected resulted in one of the biggest drops Dow has seen in its entire history.
Today Dow is close at reaching its all time high but the RSI indicator is even lower than it was a few months back,again we can see a bearish divirgence but this time the momentum indicator on the weekly chart is at its all time highs too.
I would also like to point out that the RSI indicator today has almost identical movement as it had in the crisis of 2007-2008 and is much alike to 2001-2002 recession.Before the crisis of 2008 we had an 15% drop while this december we saw an 18% drop and the rsi indicators moved exactly the same way.
In conclusion i believe that a recession can happen in a few months months but it could also take a lot more time, even if we dont see a full recession in action my opinion is that all these bearish divergences should result in a sharp drop soon enough and shorting the market right now could provide big profits to the bears.