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Is the Dax showing the way down?


Mercury

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Dax has hit tramline resistance on my hourly chart.  Probably not the end of the overall move but I am forecasting a drop down to a wave B before a final Wave C, probably up to 9750-70 resistance and Fib 50% level (red line and Fib hash line).  This may well not materialise until next week but I anticipate a drop this afternoon.

 

Chart:



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As mentioned in my recent post on "the Big One" I currently still believe that the Dax is showing the way down (actually the Nikkei is ahead of the Dax on this but they are in step).

 

The recent move up is entire expected for me, forming the Wave C of a relief rally.  I currently expect this move to top out in the 9750-9800 congestion zone at the Hourly chart 50% Fib.  Nearly there...  Chance it could come back for a kiss on the 2 Hourly tramline just above 9800.

 

The question is whether the Dax will again lead the way down with the FTSE diverging in the short term?

 



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..DAX doesn't seem to be showing the way down at the moment..but maybe the FTSE has started.  In any event I've done some EW homework and looking at the daily going back a few months to establish my overall picture.  I'm thinking we could be at B having hit 50% Fib and heading into a C wave down... does that seem plausible. C

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Condor, welcome to the EW gang...

 

It takes a lot of time and practice to get comfortable with this stuff and after 3 years I'm not at all sure I am yet.  I would urge you to practice on past charts and especially on current set up for markets you don't yet trade so you don't have any bias and then see what happens.  One thing I immediately notice is that you have a series of 1-5s following each other.  While it is possible to have a 1-5 following a 1-5 at a major turn it is more normal in trend to have an A-B-C following a 1-5 and so on.  Complex waves can sport several A-B-Cs but these are usually within W3-4 moves.

 

As to the Dax (see my version below, which I have been running now since the May 2015 turn), I saw the Dax and Nikkei as leading the others in Bearishness and thus the question in the tread title.  Of course it could be that the Dax has just made a deeper retrace and return to the W2 than the FTSE and US (not a surprise as the rally has been, in my opinion, resources led).

 

Depending on whether you use tail tops or close tops for your count (I use a best fit in the end rather than having a set rule but generally I favour the tail peaks) the W2 point moves.  I'm leaning to W2 occurring just now as this matches FTSE and US (which I prefer to see with the Dax, although Nikkei is different and more clearly leading the others down, in my view - maybe post on that later).

 

Other factors supporting my view:

  • Turning at the Fib 50%
  • Good tramline triple cutting the Fib 50% forming a resistance (turning point) junction
  • Strong Neg Mom Div, supported by high Stochastic and RSI
  • Strong Neg Mom Div on Hourly too plus a break of a potential ending triangle

 

Net, unless or until all the main markets break Nov/Dec 2015 highs I remain bearish in my views.  Either way I think we are in for a retrace now and then a retrace back up, which will tell the tale on this market (probably some time in May).

 

Chart:



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I am somewhat of a trend trader (I think that is the best way to describe my style) and the DAX has hit a sell signal (the DOW too) on the 1h chart, based on current price movements the entry point would be 10020 and exit for around 10-20 points maybe more. If the price moves up then the entry point would need adjusting

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