the German DAX 30 index fell sharply in recent weeks after it broke below the support trend line (dotted blue) of the previous uptrend. A bullish bounce, however, seems to indicate that the bulls are back in control – let’s review the wave patterns.
The DAX 30 seems to have made a bullish bounce at the 61.8% Fibonacci retracement level of potential wave B vs A, which could complete a larger wave B (purple) of an ABC (purple) zigzag correction. A break above the resistance trend line (orange) could confirm a new uptrend and could aim for the Fibonacci targets of wave C vs A. A break below the 61.8% Fib however could indicate more downside pressure.
The DAX 30 broke above the steep resistance trend line (dotted red), which could be a wave 1 (blue) of a new uptrend as long as price stays above the previous bottom and 100% Fibonacci retracement level. Bearish price action could just be a retracement and a potential inverted head and shoulders reversal chart (blue boxes) could take place if price makes a bounce in the blue box. The main criteria of confirmation however remains the break above the resistance trend line (red).
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