DAX: Elliott wave analysis

S&P Elliott wave count
May 27, 2013
US indices elliott wave update
May 29, 2013

Today’s open for DAX is very important and will probably be decisive for the trend that will dominate. The DAX opening finds the index reaching the 61.8% retracement of the downward move from the highs at 8557 to 8281. The resistance level at 8450 area is very important for several reasons. Firstly the upward move could be the end of wave B or wave 2. The downward correction that started on May 22nd we believe is not over yet. We believe that today only the second of the three parts of the correction is over. We believe that the gap will be filled and a downward move to new lows should be expected in the next few days. A first sign that this scenario is getting confirmed will be the break of 8400. will want this upward opening not to last for long and prices not to move past 8490 as this is the 76.4% retracement. on the other hand, want this positive open to last and not be weakened fast and the gap not to be closed. do not want prices to break below the red upward sloping trend line. Many would note that the decline from 8557 is in 3 waves taking into consideration the new low at 8262. I do not disagree with this note, but I prefer that the new low is part of wave B because I believe the wave count should be similar to our S&P wave count. I believe that the leading US markets will influence the European ones according to our main wave analysis and that downward pressures will be resumed.

dax

Concluding, we believe that the open today in DAX is crucial and could show us the way the markets are going to follow the next few days. Important resistance is found here and if buyers manage to overcome it, then the correction was a shallow and short-lived 2 day correction and new highs will be ahead of us. The same stands for the US markets. The decline looks and that is why our favorite scenario expects at least one more leg down. We give a lot of importance to the form of the price movements. Stop for bears will only be the high at 8557. Weakness will be confirmed if prices fill today’s gap and break below 8400.

As always, thank you for taking the time to catch up on my thinking.

A term used to describe a trader (bear) who is expects that a particular asset – be it a commodity, currency or product – to fall in value. The opposite of a ‘bull’.

The idea is that bears attack by getting up on their hind legs and striking their opponents down with their paws, symbolising the fact that they are sellers driving prices down.

Beliefs held by the aforementioned ‘bears’ of the trading world, are described as bearish. Characterised by a generally pessimistic outlook on the state of a given asset, a bearish outlook would suggest that a fall in value is imminent. Opposite of bullish.

A term used to describe a trader who is expects that a particular asset – be it a commodity, currency or product – to rise in value. The opposite of a ‘bear’.

The idea is that bulls attack by bending their heads and poking their opponents upwards with their horns, symbolising the fact that they are buyers, driving prices up.

Beliefs held by the aforementioned ‘bulls’ of the trading world, are described as bullish. Characterised by a generally optimistic outlook on the state of a given asset, a bullish outlook would suggest that a rise in value is imminent. Opposite of bearish.

A term used to describe a trader who is expects that a particular asset – be it a commodity, currency or product – to rise in value. The opposite of a ‘bear’.

The idea is that bulls attack by bending their heads and poking their opponents upwards with their horns, symbolising the fact that they are buyers, driving prices up.

Beliefs held by the aforementioned ‘bulls’ of the trading world, are described as bullish. Characterised by a generally optimistic outlook on the state of a given asset, a bullish outlook would suggest that a rise in value is imminent. Opposite of bearish.

impulse-wave-rules

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.