Like many other indices, the DAX30 has been in a strong bullish trend since 2009, which was the dawn of Quantitative Easing.
All trends end at some stage, but there is still room for the DAX30 to rise higher.
This analysis will highlight potential medium-term trade setups for this index.
The weekly chart shows the ongoing uptrend. The larger Wave count indicates that the DAX30 is in the later stages of the trend which started in 2009 (or even 2003), currently thought to be in Wave 5 of 5 of 5 (deep pink, pale pink, and turquoise waves). The massive scale of this trend, however, should still provide room for new higher highs within turquoise Wave 5 before a much deeper correction is to be expected.
The daily and 4hour chart (below) provide details of the latest correction which has been in progress since the last record high of November 2017. The correction shows that an ABC (orange) has completed and price bounced at support near the 38.2% Fibonacci level of turquoise wave 3. Price has shown good bullish momentum since then which could confirm the completion of turquoise Wave 4.
But the correction could equally still expand into a more complex WXY which may see price retrace down to the 50% fib level again. This won’t be clear until the resistance level of around 13200 is clearly broken to the upside.
Price is clearly impulsive since the last bullish bounce but whether it is truly the trend continuation or whether it is simply an impulsive move within a bigger correction cannot be known at this time. If it were part of a bigger correction, the alternative wave count could be something like it is shown in the 4hour chart below. If the latter scenario is true, price should correct down to retest the 50% fib again or even deeper.
The decision point will be whether or not the resistance at 13200 is going to break. A daily candle close above this level would be a good sign.
My preferred trade scenario would be to wait for a further bearish correction down to the 50% or 61.8%. If another strong bullish bounce occurs at those levels (perhaps in the form of large bullish daily reversal candle), long entries could be taken. The ultimate target is around 13900 (-27.2% fib level of turquoise Wave 3), but part-profit-taking at key resistance levels is probably prudent.
However if the 13200 level breaks already now, I would wait for a small pullback on the 1 hour chart after the break and then enter. I would also profit trail every 4 hour fractal (indicator) as they appear.
All the best along your trading journey…
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