DAX is set to face strong resistance around the 12900 handle, if bulls attempt to produce a counter trend rally. Any intraday attempt to rally should remain well capped around 12600/700 levels and bears should resume lower again towards 7950 and beyond.
Looking at the larger degree wave structure, not seen here; DAX had dropped from 13800 mark towards 7950 earlier. The drop had subdivided into 5 waves, forming a larger degree impulse wave (Wave (1)). Ideally, a 5 wave movement is followed by a 3 wave movement in the opposite direction.
DAX had produced a counter trend rally thereafter, which had unfolded into 3 waves (A-B-C). This counter trend rally is seen partly labelled on the hourly chart. The last Wace C, had rallied through 12900 mark, and terminated just above fibonacci 0.786 retracement of Wave (1). The termination is labelled as Wave C (2) on the hourly chart here.
Going forward, we present the probable wave counts at a lower degree here. The drop between 12900 and 11600 can be clearly sub divided into 5 waves, labelled as waves I through v of a lower degree. As the Elliott Wave Principle suggests, the wave patterns repeat themselves irrespective of the degree.
The subsequent rally from 11600 through 12600 can be sub divided into 3 waves, which terminated close to the fibonacci 0.786 retracement of previous drop. Thus we now have lower degree Waves 1 and 2 in place at 11600 and 12600 respectively.
If the above lower degree potential wave counts are correct, we should witness a sharp reversal towards 10500 levels, as Wave 3 progresses. Also for the above structure to remain intact, DAX should stay below the 12900 interim resistance, going forward.
Traders might be inclined to remain short here with protective stops above 12900 levels and projected targets below 10500 mark, going forward.
Technical Analysis Team
Offering state of the art execution services through multiple top-tier liquidity providers. Abans Global provides you with a tailor-made solution to match the demanding requirements of your business, with the multi-assets offering, advanced trading platforms and FIX API connectivity that provides ultra-low latency.