Bottom line:  DAX remains bearish until 13425 resistance stays intact. Bears remain poised to take out initial support at 12886, before pulling back.

Technical Analysis:

DAX remains in control of bears with 13425 resistance intact and prices pushing lower to break below 12886 supports. The low print yesterday was at 12948 before retracing higher again but corrective rallies should remain well capped below 13425 from here on. A break below 12886 would confirm that bears are firmly in control and any pullbacks should be seen as opportunity to initiate short positions against 13425. Looking at the overall wave structure since 13596 highs, DAX has produced a 3-3 pattern; A-B-C lower towards 10279 and 3 waves higher towards 13425 respectively. Ideally, the above should be followed by at least 3 wave drop of the same degree. This could potentially bring back prices close to 10279 or lower levels. Please note that a standard flat could produce a 5 wave drop dragging prices below 10279, before reversing. In either case, a high probable trade direction is lower from here, against 13425/600, with potential targets below 10279 respectively. A price break below would confirm the above and series of lower lows and lower highs could be expected thereafter. Also note that prices have reversed from the fibonacci 0.786 retracement of earlier drop between 13596 and 10279; accompanied by channel resistance and hence a more significant bearish reversal could be on its way. Either a 3-3-3 or a 3-3-5 wave structure is possibly on its way until DAX remains below 13424/600 levels, going forward. The above pattern calls for a drop towards the December 2018 lows at 10279 levels. Watch out for a continued push lower from here breaking below 12886 initially and subsequently below 10279 respectively.

Prepared by

Harsh Japee, Technical Analyst.

DAX Chart

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