DAX Resistance Intact Around 13500 Mark

15 September 2020

DAX might have carved a lower high around 13500 levels, potential resistance going forward. The indice has reversed through 12900 levels thereafter and also managed to produce a pullback towards 13190/13200 levels respectively. Ideally, it should stay below 13500 levels.

DAX had earlier dropped from 13800 through sub 8000 mark in March 2020. The drop was in 5 waves making an impulse Wave (1). Also note that subsequent rally has unfolded as A-B-C, hence corrective Wave (2) on the chart here.

DAX has carved a classic Elliott Wave pattern 5-3 between 13800 highs and 13500 lower highs carved recently. If the above proposed counts hold well, the indice is setting up for a Wave (3) lower towards sub 8000 levels over the next several weeks.

A break below 12800 interim support and subsequently below the counter trend line support would confirm a bearish reversal and that potential Wave (3) is underway. Bottom line is that DAX should stay below 13800 resistance, the February 2020 top.

A drop below 10000, Wave B termination of the counter trend rally would be extremely encouraging to bears as it confirms a push below 8000 levels going further. Also note that fibonacci 0.88 retracement of earlier drop should provide enough resistance for DAX to turn lower from here.

Traders might be inclined to hold short positions from current levels (13100) with a protective stop above 13800 mark and projected targets below 8000 over the next several weeks.

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