DAX - Minor top near 13,029 expected

DAX - Close to short-term exhaustion?

DAX - Minor top near 13,029 expected

DAX - Minor top near 13,029 expected

DAX - Close to short-term exhaustion? 

The German DAX posted a new all-time high yesterday at 12,976. This is in line with the expectation of a final rally closer to the resistance cluster-area between 13,424 - 13,435. 

Short-term, the rally from 12,044 looks stretch and is expected to run into a temperary to near 13,029 in wave iii for a correction in wave iv towards 12,797 and the a final impulsive rally into the 13,424 - 13,435 area to complete the impulsive rally, not only, from the February 2016 low at 8,695, but also from the March 2009 low at 3,589. 

Once this impulsive rally is complete a larger corrective decline should be expected, but for now, we need to stay focused towards the upside and the important 13,424 - 13,435 area. 

I would like to add one word of caution. We are in the final stages of the rally from for March 2009 and once the top is in place a larger correction towards at least 8,700 should be expected. This means that from the current level of 12,955 a potential profit of close to 4% is avalable, but the potential downside risk is close to 33% or almost a 10 to 1 risk/reward. 

 

DAX - Possible S/H/S top

DAX - Possible S/H/S top bulding

DAX possible S/H/S top building 

The DAX index ended its major wave 5 in early July 2007 at 8,151.57 and we have since then seen wave (A) down to 3,588.89 in early March 2009 and wave (B) ended almost perfectly on the 138.2% extension target of wave (A) at 9,931.15 (the high came in at 10,050.98). I'm now looking for an impulsive decline in wave (C) lower to 2,693, where wave (C) will be 161.8% longer than wave (A), which is a very common target for an expanded flat correction.

The DAX is likely building a S/H/S top, with the left shoulder building from late October 2013 mid-March 2014 and the head building from mid-March 2014 to early August 2014 and since early August 2014 the right shoulder has been building. To activate this top-formation a break below the neckline at 8,903 is needed for a measured decline to 7,755, but that is the minimum target. The decline could easily be much larger and likely will be much larger as I expect an impulsive decline in wave (C). I would expect the break below the neckline to be seen in late October 2014. 

Looking at both the MACD and the RSI indicators, we have seen the classic divergence build since the top of the left shoulder to the top of the head confirming a clear loss of momentum during the last part of the rally.  

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Thomas
2014-08-11
Sublime Counts!
Duane
2014-08-29
Hey EWS,

Great work on the GBPCAD and the NZDCAD. These are the type of opportunities that I am looking for, monthly turns caught with daily or hourly entries. Easy money!!

Duane
Duane
2014-05-26
Great job this week!! Wish that I had more capital to capitalize on all of your great calls! The ones that I have managed to catch have been extremely profitable. I really appreciate you sharing you v...