DAX is holding well below the 13800 resistance carved in February 2020. Further bears have been successful to trade below 13300 mark as well. The indice has also broken below its counter trend line support and should resume lower towards 10150 levels in the near term.
DAX probable wave counts are as follows: The indice had dropped from 13800 through 8200 mark between February and March 2020. The drop was an impulse wave, clearly sub dividing into 5 waves. It has been labelled as a larger degree Wave (1).
Ideally, an impulse drop should be followed by a corrective rally. DAX has managed to produce a counter trend rally A-B-C towards 13300 mark. This has been marked as Wave (2) on the chart here. If the above proposed wave counts hold well, we should witness a Wave (3) drop towards 8000 levels in the next few weeks.
Also note that Wave (2) corrective rally had managed to reach up to fibonacci 0.88 retracement level around 13300 mark. This is one of the last resistance zone for potential Wave (2) termination and a push higher would threaten 13800 resistance.
Immediate resistance is seen around 13800 mark, while support is around 11600, followed by 10150 respectively. A break below 10150 would certainly confirm that bears are in control and that a meaningful top is in place.
Traders might be inclined to initiate fresh short positions around 13000/100 mark with protective stops above 13800 and projected targets towards 10000 and beyond. Only a break above 13300 and 13800 would change the above bearish structure.
Technical Analysis Team
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