Bearish price action on US indices after breakout to ATH - What lies ahead?

The price action on the US indices last Friday does not inspire confidence after the bullish breakout on all of them. Below is a brief synopsis of the technical picture:

DJIA, after a strong breakout to an ATH the previous week, consolidated sideways through the last week with a negative bias. Last Friday, it closed below the sideways range. The weekly candle formed a narrow Bearish Harami with its high below the high of the previous week's ATH, a bearish development and a sell signal when looked at in conjunction with the previous week's big green candle.

Nasdaq and S&P, both broke out of a range last Thursday that formed after a vertical rally in the prior weeks, with S&P making an ATH. However, there was no follow up the next day with both indices forming a narrow range Bearish Harami on their respective daily charts, a sell signal.

The European and Asian indices present a mixed picture with many of the prominent indices like FTSE, CAC, HSI and Australian ASX showing a similar bearish picture for last week after remarkable rallies in the prior weeks.

Nifty, the Indian index, paints a similar bearish picture. A breakout in the prior week from a 15 week range fizzled out during the week. Last week, the price retraced back into the range forming a red candle that closed the breakaway gap, a fresh sell signal on the weekly chart.

Overall, the bearish price action last week on the global indices after triggering a buy, points to one of the most reliable sell signals in technical analysis, a buy failure. Only time can tell what happens next.

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