Bottom line:  DAX prints yet another high at 13548, inching closer to 13596, January 23, 2018 highs. A break below 12948 is required to confirm a bearish reversal ahead.

Technical Analysis:

DAX bulls are poised to test 13596 resistance before reversing lower again. The indice has managed to remain shy by a few points from the January 23, 2018 high and could break higher today. This would fall in line with SPX500 printing fresh highs. Please note that this rally towards a potential high could be short lived, and DAX may reverse sharply. It is better to exercise restraint and avoid long positions. A safer trading strategy from here could be to remain flat and allow price action to unfold below 12948 supports. This would confirm that a meaningful top is in place and that bears are in control. Aggressive traders may want to remain short with potential stops above 13600 mark; but initiating long positions should be completely avoided. The overall wave structure since 13596 highs until today has unfolded as a 3 wave Down, followed by a 3 wave Up. As discussed earlier the entire structure could be a standard or an expanded flat in the making. In either case, we can expect prices to reverse lower towards December 2018 lows close to 10200, going forward. It is therefore safe to sell on rallies through 13600 mark (aggressive trading strategy) or to allow price break below 12948 (conservative trading strategy) before initiating shorts again. Also note that DAX is testing the Elliott Channel Resistance for the third time in the past 2 months and could be close to forming a meaningful top around 13500/600 levels. Watch out for a bearish reversal from close to above levels and a break below 12948 to confirm.

Prepared by

Harsh Japee, Technical Analyst.

DAX Chart

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