DAX Update of the LT EWP

By: TheWaveTrading | Thu, Jan 9, 2014
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Lets suppose that from the March 2000 top price has formed a Triangle, which was completed on September 2011. Since the advance off the September 2011 low cannot be counted as impulsive I have to infer that the March 2000 top is a wave (W) and the wave (E) of the triangle established the wave (X) of a Double Zig Zag. Following this scenario the thrust that began at the September 2011 low is the second wave (A) of the assumed DZZ.

The Triangle theoretical measured target for the wave (Y) is located at 12.400, but before the kick off of the wave (Y) a potential multi-month/year pullback for the wave (B) will have to be expected with a target in the range of the 0.382 - 0.618 retracement of the wave (A) advance.

DAX Chart
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Next in the following weekly chart I have labelled the advance from the September 2011 low as a Triple Zig Zag. If this count is correct from the June 2013 low we have the beginning of an impulsive up leg that is expected to conclude the TZZ and establish the top of the wave (A) of the DZZ scenario discussed in the monthly chart.

Within the impulsive sequence, in my opinion on January 2 price has established the wave (3), hence a wave (4) pullback (larger than the current one) will be followed by the last wave (5) up.

DAX Chart
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Weekly RSI is displaying a negative divergence after hitting on November 29 a trend line resistance that has remained in force from the 2007 high. A weekly negative divergence is a sign of waning momentum, which usually occurs when price is in the process of establishing a major top. This negative divergence should also be displayed once the expected pending wave (5) up is done.

Weekly RSI Chart
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Next in the daily chart below I show you the assumed wave (3) impulsive sequence, which began at the September 4 low and concluded on January 2.

If this count is correct, taking into account that the assumed wave (4) pullback so far is too small (price and time wise compared to the wave 2), price should either unfold a larger downward correction with a potential target in the range 9301 (20 dma) - 9256 area of (horizontal support) or it should form a Flat or a Triangle.

Once the wave (4) is in place the following wave (5) up could aim at the equality extension target of the preceding wave (1), which achieved 801 points.

DAX Chart: Daily
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TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

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