Originally prepared on 21st October 2014: German DAX - 2 Weekly
The German DAX chart below is 2 weekly. This is to show bigger picture but not miss the finer details that happens with Monthly. We do not have price data on the chart prior to 1991. However, it is fair to conclude that the major bullish cycle that commenced in 1982 on other major world indices would also be true with DAX. With that assumption, I am concluding that the 2000 high was Larger wave 3 top. Incidentally the Elliott Wave International has been maintains that it in fact completed Grand Super Cycle of which wave 5 based on Dow Ind started from 1929 low. I think they are correct on some indices, but might need to review their analysis in view of Dow, SP500 and DAX making new all time highs. This could still be expanded wave B if they are correct. However, my view is that the price action since 2000 high to 2011 low could be triangle representing larger wave 4. If this is correct then the subsequent price action to recent high make lot of sense to me. Therefore, I am going to work with this premise.
Therefore, wave [4] ended with 2011 low and the wave [5] commenced which in most western stock indices has been forming rising wedge as are may major individual stocks. This rising wedge is "Ending Diagonal" referred to as 3-3-3-3-3 where every swings are made of 3 smaller waves in the form of zigzag. This pattern namely rising wedge "Ending Diagonal" forms at major top or at cycle ending. In this instance I think that the entire cycle that commenced from 1982 has completed which it self is a part of larger cycle that commenced from 1929 low. If this conclusion is correct then over the next several years we will see significant decline as it retraces larger cycle.
German DAX Daily -
Having noted the above, it seems that DAX has topped on 3rd July 2014. Since when, we appear to have 2 strong down swings. It is too early to be too specific, but it could be developing wave 3 with second down swing being minor wave i. This could retrace likely any normal waves but with structural resistance and I think 9000-9200 could be possible price weakness, Even if it should retrace deeper to say 78.6% in the region of 9600 it should be a zizgag and show weakness. Should we see this then it will be ready for short with momentum increasing in the next decline. So for now closely monitoring and acting on confirmation. We will continue to update this on weekly basis.
In the short term it could retrace to 9600 region, but any sign of weakness could be excellent short entry
A-shot
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Excellent coverage - nothing to add and to ask. Is it the same for FTSE? I.e. is europe still in the down trend?
DanV
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Thanks for your comments. FTSE 100 has also topped and judging by the decline it looks very impulsive possibly 1st wave larger cycle decline. Retracement is expected but that will probably create lower low.
A-shot
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I see that lately Denmark made more significant moves, Sweden also made a great rebound i managed to miss. But in general people are still bearish on Europe. The whole move lower was supported by US dipping, but the rebound did not mirror the US rebound to the fullest. Should US turn lower, EU is to dip to new lows indeed. But all is mostly hanging on DAX and FTSE. Ill use youre chart as a reference for the near term.
DanV
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Thanks. Keeping 1 ear to the ground as they say, looking for anything that might suggest otherwise, whilst holding the view till then.