Published 25th January 2018 & validated 17th May 2018
The market is setting up a bear trap. Odds are good that the cycle 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 bull trend is maturing.
Updated 17th May 2018
The most important conclusion remains unchanged. The cyclical trend is most likely up. Both DAX Elliott wave patterns, that we discussed here on the May 7th update remain most probable.
Meanwhile, the DAX probably decided to take another step up within its short-term trend since the March lows. Strength indicators diverged to new price highs. A sideways correction got on the charts. This condition seems to resolve now. We interpret it as a fifth wave as long as momentum does not accelerate sharply. It implies that German equities could approach a correction soon. It may be either a second wave of minute or of subminuette degree.
Whatever it is, we remain bullish and will deal with a correction once it develops more wave structure.
Short-Term Dax Elliott Wave Analysis
Updated 7th May 2018
We do not see any fade on the Dax index. German equities are reaching interim highs on gaining momentum. This is rather a sign of an extension than of an imminent reversal. We should be all aware that we are quickly approaching the German dividend season. These will be added to the Dax as we are dealing here with a performance index. At the same time, we do not see a positive shift in sentiment for German equities yet. All in all, these are reasons for more upside imminently.
Technicals suggest that the Dax is within a 3rd wave to the upside. This condition changes once momentum loses steam and prices depart outside the trend formed from the beginning of April 2018. That’s not the case as we publish this.
We remain with our forecast to see another all-time high in the Dax during the coming weeks. 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. We assess an expanding triangle or a complex double-three sideways combination as the most likely real-time wave setup.
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.