DAX Holds Below Resistance At 13800 Handle

08 September 2020

DAX had managed to rally past 13400/50 levels over the last week before bears took control back. The indice declined sharply through 12800 levels around Friday close. It has recovered some lost ground and is seen trading around 13100 handle for now.

DAX probable wave structure is as follows: The indices has managed to carve the classic Elliott Wave pattern 5-3 since 13800 levels. The earlier drop between 13800 and sub 8000 levels had unfolded into 5 waves, while the corrective rally towards 13400/50 unfolded into 3 waves.

If the above structure holds well, DAX should stay below 13400/50 levels and continue lower towards sub 8000 levels as Wave (3) of a larger degree unfolds. Alternately if prices break above the 13800 resistance, the bearish structure would change on the near term.

Going further, the short term wave structure is also suggesting the following counts. The drop between 13400/50 and 12800 levels might be a lower degree Wave 1. Subsequent rally towards 13100/200 might carve/terminate a similar degree Wave 2.

If the above holds well, we should witness a sharp Wave 3 of (3) decline lower toward 11500 and beyond. Also note that prices should remain below 13400/50 mark. Immediate resistance remains around 13400/50, followed by 13800 levels respectively.

Traders might be preparing to initiate fresh short positions around 13100/200 levels going forward, with protective stops above 13800 and projected targets below 8000 levels respectively.

Prepared by
Technical Analysis Team

Disclaimer: This information has been produced by a third party, for general information purposes only, and is not indicative of future results. Abans Global takes no responsibility for its accuracy or completeness. Any opinions expressed do not reflect those of Abans Global. This information does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should seek independent advice before making investment decisions. Reproduction of this information, in whole or in part, is not permitted. Please note: If you are a Professional client, you are not eligible for negative balance protection and you could lose more than your initial deposit.

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