Published 25th January 2018 & validated 15th March 2018
The market is setting up a bear trap. Odds are good that the interim top has not been seen yet.
The German index is within a secular bull market trend to the upside. The cyclical swing within the secular bear is maturing, however.
Short-Term Dax Elliott Wave Analysis
Updated 15th March 2018
We remain with our forecast to see another all-time high in the Dax during the coming weeks. We still assess an expanding triangle as the most likely scenario for the German index. The latest drop looks like a 3-wave move despite not being confirmed yet. Latest wave action took the Dax outside its descending (solid green) trend channel.
The bounce from our c-wave of minute degree may be counted as a leading diagonal to the upside. The subsequent correction occurred as protectionist US trade policies became certain. Moreover, the moderate Secretary of State Tillerson got replaced by another hardliner in the Trump administration.
These are some relevant fundamental news for Germany. The country is among if not the biggest exporter in the world. It is clearly bearish and the market’s reception gives us a good hint about sentiment. The bearish newsflow accounted for less than 150 Dax points as we publish this. We interpret this as positive sentiment among Dax investors. The market is able to deal with bad news. Hence, we expect much more progress on good news.
Therefore, we remain bullish on the Dax index short term.
Updated 12th March 2018
The Dax went in a 3-wave move into its January 2018 all-time high. The only valid Elliott wave patterns doing that are corrections! Hence, the top is not in for the current cycle
The German index retraced 78% of its latest drop. A potential trend channel to the downside (dark green)got violated with a solid closing above the channel. Moreover, a potentially bearish 1-2-1-2 Elliott wave sequence heavily lost traction due to this action.
Market action shifted odds further towards the black scenario. We see bullish risk inclination among US and European investors. Furthermore, the overall picture gets confirmed by short-term momentum. It is on the rise and yet another bullish hint.
We remain with our bullish short-term outlook on the German Dax index.
Mid- And Long-Term Dax Elliott Wave Analysis
Updated 8th February 2018
In the medium timeframe, the Dax index has completed a contracting triangle of cycle degree. It has started from the peak of the tech bubble in early 2001 and finished in 2011 with a breakout to the upside. We expect to see cycle wave V in the coming years. This should lead to a bull market for at least a part of the next decade. Triangle breakouts are usually swift. From a technical analysis perspective, a right look of the entire wave structure would develop if we see a cycle wave V in the magnitude of at least 38% in comparison to the previous cycle waves.