Bottom line:  DAX is seen to be progressing towards 10200 levels as expected. The drop has been extremely sharp with shallow retracements.

Technical Analysis:

DAX is firmly in control of bears since February 24, 2020 and the drop has been extremely sharp and swift without any meaningful retracements. Looking into the wave counts since 13800 highs, we can count 5 waves with wave 3 being extended. The overall wave structure could be seen as a larger degree expanded flat, a 3-3-5 since January 23, 2018 highs. The initial drop from 13595 through 10279 was in 3 waves labelled as A-B-C here. The subsequent rally towards 13800 levels was also an A-B-C; 3 wave structure. As discussed as one of the probabilities earlier, DAX is seen to be unfolding the last leg within the expanded flat sub dividing into 5 waves. The drop has been sharp until now and bears have managed to reach 10556 lows until yesterday. DAX is expected to terminate close to 10200 levels before producing any meaningful retracements. Meanwhile, also please be aware that any pullbacks could be seen as opportunities to initiate potential short positions. Looking at the weekly charts, a larger degree Wave ((3)), seems to have terminated at 13600 levels earlier. DAX might be working on Wave ((4)) termination, an expanded flat, which has potential to drop close to 9000/9200 levels before resuming the last Wave ((5)) higher. Most traders might be looking to hold on to short positions taken earlier or might take some profits at current levels. Since the drop has been extremely sharp, a pullback rally could be seen to materialize towards 12000/200 levels and it might be seen as an opportunity to initiate short positions again. At the moment DAX remains a potential sell on rallies candidate.

Prepared by

Harsh Japee, Technical Analyst.

DAX Chart

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