It appears as if the German Dax set up a nice bear trap last week. The drop from mid-May as well as the subsequent bounce appears to be 3 wave swings. Moreover, the other main European indices appear not done with their correction to the downside short-term. Depending on the intensity of a further selloff, Europe may set the path for the next big swing and potentially decide whether a cyclical top is in or not.
The best strategy is to stay on the sidelines and protect capital. A new opportunity will pop up sooner or later. At the moment it appears likely that the Dax will dive below its May 2018 low or correct in a sideways pattern.
However, things are very different if the German index exceeds the red trend channel immediately AND another major European equity index confirms this action. That would be a strongly bullish signal and we would not want to miss an attempt to hop on German equities. Ultimately, this should lead to a break of the May top, which means that the Dax shows a non terminal elliott wave count. This would further imply that a break of the January 2018 is sooner or later on the menu.
Activation: Confirmed (2nd Mkt) break outside red trend channel
S/L : Low of the curret swing (started end of last week)
Target: >13,600
The best strategy is to stay on the sidelines and protect capital. A new opportunity will pop up sooner or later. At the moment it appears likely that the Dax will dive below its May 2018 low or correct in a sideways pattern.
However, things are very different if the German index exceeds the red trend channel immediately AND another major European equity index confirms this action. That would be a strongly bullish signal and we would not want to miss an attempt to hop on German equities. Ultimately, this should lead to a break of the May top, which means that the Dax shows a non terminal elliott wave count. This would further imply that a break of the January 2018 is sooner or later on the menu.
Activation: Confirmed (2nd Mkt) break outside red trend channel
S/L : Low of the curret swing (started end of last week)
Target: >13,600
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