After having passed 12.000 points, the german DAX (with dividends) is now approaching the next resistance at ~ 12.530 points, a fib retracement 78.6%. In this area one can expect a correction - entering wave 4, after the final rise to wave 5, which shall have a maximum lower than the older ATH. If my analysis is right, consisting out of fib retracement + EW-Waves, the rally should go on till summer 2019, with the mentioned correction in between.
The fundamental facts aren´t positive (falling gdp, political problems, migration crisis, energy uncertainty). From this side one cannot expect support for the index; on the contrary this gives us more reasons to expect the correction.
I think, the ECB will take all possibilities to ensure that the markets are going round, the states will be able to pay their debts, the banks will have enough liquidity for new credits. And this will lead the european indices to their final rally.
I´m curious about the political methods the ECB will consider to activate? Will it be negative interest rates, prohibiting cash, new ELA´s for the national banks, ... ?
The DAX will be driven by the political decisions - not by economical facts.
This is no trading advice!
Operación cerrada: objetivo alcanzado
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Comentarios
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I think DAX will turn within the next time. RSI is already in overbought zone, MACD seems to be about triggering to the bottom. The limit for this rally can be the fib retracement 78,6% (12.530), as I´ve analysed above. The next, correcting wave, can take the DAX to levels around 11.700, minimum 11.400; a decline of approx 7% from the high.
DAX has fallen deeper than expected - but nevertheless the long trend is still valid until wave 4 turns above the level of wave 1. The fib retracement 61.8% is the decision line - will it stay strong and stop the downtrend, then the index should enter wave 5. If the fib retracement isn´t strong enough and wave 4 is continuing the downtrend below 11400 points the whole EW-analysis would be false (EW isn´t a very exact and precise method; there are lots of exceptions and you need more than 50% intuition).
I have added a parallel channel; up to now EW stood within this channel but the last movement broke out of it - to the bottom. An alarming sign?
On the other hand RSI and MACD are already very low, perhaps just before turning. And there are several gaps. Gaps are both: accelleration of trends or reminders for missed prices. You´ll see in within the next few hours / days.
2 scenarios:
a) DAX is turning on the actual pricelevel (must be turning above 11450), closing the gaps and entering wave 5 -> bullish
b) DAX is continuing the downtrend below 11400, then the next support would be fib retracement 50% (normally not very strong) or even below -> new analysis
Luettis
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ahmedse
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it happened as predicted!!
But dont you think that the last rally is the fifth wave?
(3rd began on Mar 26 and fifth on april 10th)
Luettis
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@ahmedse, no that hasn´t been possible. Look, the turning point of wave 4 hasn´t to be lower than point 1. But that has been the case. Also wave 3 hasn´t to be the shortest of the 5 waves. It hasn´t to be the longest one, but very often it is. And from 5 waves the last one sometimes is the shortest one but the steepiest as well. So, in my opinione we´ve seen motive wave 3 and are entering correcting wave 4. But to be honest, EW often fails. It´s only one more confirmation.
ahmedse
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@Luettis, thanks for explaining! it makes sense
Will mostly close at 11900-12000 and watch for daily close above or below the trend line
I have added a parallel channel; up to now EW stood within this channel but the last movement broke out of it - to the bottom. An alarming sign?
On the other hand RSI and MACD are already very low, perhaps just before turning. And there are several gaps. Gaps are both: accelleration of trends or reminders for missed prices. You´ll see in within the next few hours / days.
2 scenarios:
a) DAX is turning on the actual pricelevel (must be turning above 11450), closing the gaps and entering wave 5 -> bullish
b) DAX is continuing the downtrend below 11400, then the next support would be fib retracement 50% (normally not very strong) or even below -> new analysis