Bottom line: DAX bearish outlook prevails until prices stay below the 13600 resistance. A standard flat could be underway against 13600 levels.
Technical Analysis:
DAX seems to be under control of bears since 13375 highs print on November 19. 2019. Last week rally back towards 13200 levels can be seen as a pullback or retracement and the indice is expected to resume lower towards 12500 levels from here, as an initial target. The overall wave structure since 13600 highs has produced a 3 wave drop between 13600 and 10275 levels, labelled as an A-B-C. This was followed by another 3 wave rally towards 13375 levels, labelled as A-B-C here. Ideally, a 3-3 wave structure is followed by a 5 wave movement, against the primary trend. If prices remain below 13600 levels, we could witness a 5 wave drop dragging prices towards 10200 levels. Alternately a push above 13600 levels would delay the projected drop as an expended flat might unfold. In either case, a drop toward 10200 levels seems imminent and hence a high probable trade direction is expected to be on the south side against 13600 levels, with projected price target around 10200 respectively. An immediate downside target is around 12500 mark, while break below 11878 levels would confirm that a meaningful top is in place around 13375 levels. Looking at the shorter wave counts, the drop from 13340 through 12930 levels looks to be an impulse, which was retraced last week and DAX rallied through 13200 levels. If this short term wave structure holds true, prices should ideally remain below 13340 levels and continue dropping towards 12790 and lower levels respectively. Watch out for a break below 12930 levels to confirm that price action has yet again turned in favor of bears.
Prepared by
Harsh Japee, Technical Analyst
DAX Chart
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