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Market Report: Elliott Wave Analysis of the DAX
From the March 2009 lows we can clearly see that the market resembles a 3 wave advance, this is a key component to Elliotticians as it suggests the advance is a corrective move against the decline from 2007-2009.
If you look closer you can clearly see what looks like a wedge shape. I am currently working an idea on the SPX to see a new yearly high around 1480-1500SPX either into the yearend or the start of next year.
Hence which I think the DAX is likely to drag other markets higher, you can also see the 3 wave decline from the September 2012 highs, this is a strong sign that the US markets likely made a corrective decline and this idea fits in with my long term ideas for the US markets as well, to run up and test the Sept 2012 highs around 1480 on the SPX.
Currently I think the DAX is working an ending diagonal and now in wave , so a target towards 7550-7600 is favored, which should see the SPX see that new high I want to see for its pattern.
The advance has been a strong move, but we still need to see some sort of 3 wave move, I suspect it start to get choppy as it enters 7400-7500 area, but overall I am looking for a new yearly high to complete the ending diagonal idea.
To non technicians you can see the bearish wedge shape, although on this scale it can still take a few more weeks to finish as it's lacking a new price high.
So the bulls really need to stay focused on this idea as the market approaches my target band I strongly suggest caution for anyone still long this market, as if my interpretation is correct and we make a new price high, the expectation is for a strong reversal, one that could ultimately suggest this market is going back to test the Mar 2009 lows and target 3500.
Until next time
Have a profitable week ahead