Published 28th February 2019
The situation in the DAX is quite simple. Either the German index finished an intermediate degree bear market rally or there will be an extension. The February 26th high finished an intermediate degree zig-zag. However, as mentioned before, this needs to get confirmed. The diagonal pattern within the yellow trend can be either an ending diagonal or a leading diagonal. The leading diagonal is depicted in red and implies an extension to the upside.
Which path is more likely? The broad-based macro picture makes an ending diagonal more likely. Moreover, momentum is diverging significantly in the DAX. Price action has to lead swiftly to the downside in order to confirm this bearish case.
What needs to happen that the red path plays out? Taking out 11,600 points on increasing momentum implies that the diagonal was leading a bullish breakout. That kind of action clears the path towards 12,100 points. It is depicted within the red scenario, which shows an extension within the c-wave of minute degree.