DAX Spot had reversed sharply yesterday and managed to close around 12540 levels. Bears might be poised to push lower towards 12200/50 levels, the next in-line support. We can expect a pullback rally thereafter. The indices remains good to be sold on rallies going forward.
DAX probable medium term wave structure is as follows: The indice has managed to hold classic Elliott Wave structure 5 Waves Down, followed by 3 Waves Up. It had dropped between 13800 and sub 8000 levels, sub dividing into 5 waves.
Further, the corrective rally towards 13400/500 was in3 waves. If the above proposed wave structure holds true, DAX should ideally remain below 13800 and turn lower towards sub 8000 mark sub dividing into another 5 waves. This would complete a 5-3-5 wave structure going forward.
Looking into the short term wave structure, the drop from 13500 through 12700 could be lower degree Wave 1 on the chart. The subsequent counter trend rally towards 13300 could be marked as potential Wave 2. If the above holds true, Wave 3 might have resumed lower.
Immediate resistance is seen towards 13500, followed by 13800, while support is seen around 12200, followed by 11600 respectively. A push below 12500 from here would confirm that bears are in control and DAX should accelerate towards 12200 and 11600 over the next few trading sessions.
Traders might be preparing to hold short positions with protective stop above 13800 and projected targets below 12200, 11600 and beyond.
Technical Analysis Team
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