German DAX Could Be In A Reversal Into Higher Levels

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 rallied up to 10000 psychological level recently where we see end of a five wave recovery; ideally of a blue wave one. As such, we should be aware of a contra-trend or sideways reaction with an A)-B)-C) formation as a flat that may look for a completion of wave two near 9100-9400 area later this week. That would be the perfect region for a continuation up into a big third leg. So if we are correct, then price should move south in the short-term.

DAX 4 Hour Chart

DAX 4 Hour Chart

Source: www.ew-forecast.com

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