Dax turning down?

[Mercury]

Is the Dax joining the FTSE in a turn?  Can't tell yet if this could be a major market turn or just a retrace before another rally phase but is turning at resistance zone with a credible A-B-C retrace form to the rally and neg Mom Div on Daily, 4 Hourly and hourly.

 

Alternative big picture path on Daily chart in red labels.

 

Anyone got a view on the Dax or stock indices generally? 

 



 

 

 

 

[donaldprice]

Been analysing the DAX for a while as well as the FTSE and I don't know what views people hold on if we will make new highs or not, however, looking at the DAX currently it does appear that we could be riding C wave. What I have however observed is that we are closely approaching the 88.6% retracement level which is ( around 11120 level area), no divergence on daily as of yet, but thought this may be worth a close watch regardless. P.S Mercury I have only just realised after posting this a moment ago, similar levels have been matched on your analysis too, I promise I did not copy your analysis, but do share similar views.

 

[Mercury]

HI , if you are using similar analytical tools it is not surprising you would have similar results so no worries.  It is better I guess if several people come to a similar conclusion independently but we can't help being influenced by others.  One reason I like to discuss things with day traders like  is that when we come to a similar conclusion using different methods and trading on different timelines then there is usually something of interest.  When we disagree that is also interesting and gives pause for thought, no bad thing.

 

On the Dax I agree with your overall assessment however I dislike relying on the 88.6% Fib, it is a highly unusual turning point.  62% is the most common, closely followed by the 50%.  This is not an accident in by view as the 62% forms the so-called "Golden Ratio", something we are drawn to naturally and subconsciously.

 

On my Daily chart I have 2 Fibs in operation, the first (black) is the same as yours and the market is fast approaching the 76.4% Fib, a possible turning point but so far my EWT count (on lower time frames and on other markets) doesn't yet support a turn here.  I also have a Fib from the 12,411 high (Purple), which reveals a 62% fib line at the top of my resistance zone.  This is my lead scenario for a turn in Wave C (the second red circle).

 

You will also notice that there are many A-B-C structures in the long term move, this is supportive of a larger A-B-C rather than a motive wave, as we have with the US markets.  However at present we cannot 100% discount that this morphs into a motive wave and so I still have my 2 scenario large scale count (purple labels).  I am highly skeptical that this is a large scale final wave 5 as that would mean we have only just begun a wave 3, which would then run way beyond the 12,411 high.  I just can't see that yet, given where the US markets are.  So for now I am sticking with my forecast that FTSE and DAX are in retrace and may signal a US top.  Nikkei too is in retrace not motive.  If we see retrace points on these 3 markets at a place where a US large cap end is possible (from a technical analysis POV) then that could get interesting.

 

This is all somewhat academic for me just now as I will probably not seek to trade a possible US top on stock indices, rather I'll wait for a confirmed turn, unless a very low risk opportunity presents itself.  But chasing the top is a sure way to losses so better to play it cool in my view.  I will continue to analyse it and discuss it with anyone who wants to of course.  Meanwhile there are lower risk set ups elsewhere just now.  This is a risk management game after all...

 



[donaldprice]

Hi Mercury, and yes as you say, by using similar analytical tools, quite often we do end up with the same conclusion. From a fundamental point of view, these indices seem to have their bullish momentum driven by cheap money handed out by central banks, with a low interest environment and low bond yields, indices are being artificially inflated in a low growth environment, which spells potential disaster in the long run for bulls. However this will take time before its realised that no amount of cheap money will solve some of the most crucial economic issues, but until that happens, no point calling tops, just sit and wait and look for others for now or trade of course some intraday-opportunities whenever they are spelled out for us.