German DAX : Bullish Reversal May Be In Play

Gregor Horvat

German DAX has been trading south for the last few weeks but it can be only a temporary weakness if we consider that big trend is up after a three wave drop from April high to September low at 9300. We labeled this as big zigzag that represents A of a complex correction, while bounce to 11418 was wave B. As such, move down from 11411 was wave C as part of a flat correction that can be finished with recent leg up to 9600. That said, be aware of more gains ahead.

DAX Daily Chart

DAX Daily Chart

On the lower time frame, DAX is at the highs, now probably in wave 3-circled that has room for 10000 and then even 10600 region; at 161.8% Fibonacci extension level. In the meantime, invalidation level is at 9330; so we will continue to look higher as long as this support is not breached. Ideally, a new strong bullish impulse on stocks has already began.

DAX 4 Hour Chart

DAX 4 Hour Chart

Source: www.ew-forecast.com

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