YaKa

DAX - High Probability Top In Place - Recap in 14 points

FX:GER30   DAX index of German listed shares
641 24 10

(1) There was a perfect setup against key trendline at 11,850 (blue line in Logarithmic). Obvious perfection often does not work > Solution: undershoot or overshoot. Here: Overshoot 4%.

(2) Elliott - At 12,208, the Elliott wave pattern since Dec14 is complete. Wave iv of 5 of V in Big III             .

(3) Fibonacci - In those waves, Wave V = Wave III             and wave v = wave iii            

(4) Hidden trendline – The red line on the chart below is probably very important (especially the way it was fitted in Jun14) – Likely to retain.

(5) R3 annual hit at 12,206 – That alone is a very important statistical target (note how the Pivot retained exactly in Jan15).

(6) ATR Band (proprietary indicator): the top band is at 11,700, there was a 5% excess. This is unlikely to get more stretched before some lateralisation and moving average catchup.

(8) We do not have a long lasting global phenomenon like in January 2000. This is only a DAX             story for now.

(9) EURUSD             which has been the initiator of this move is not marking new lows and could actually rebound from here.

(10) Unless SP500             breaks 2100 again, it is probably subject to a correction below 2000.

(11) Extremely bullish News Flow this weekend given the close on Friday – Consistent with TOPS (necessary but not sufficient though).

(12) Time sequence – 26 days up in wave V – that is consistent with previous vertical climax since May13.

(13) Time Sequence – Last week completed 9 weeks vertical up – The likelyhood of a top or at least some weeks down is increasing.

(14) Progress: 46% From Oct14 to Mar15 (5 months) - Note that Big wave I was also 45% from Oct11 to Mar12 (5months).


Confirmation: trading below 11,800
Invalidation: trading above 12,450
My Pain Stop for now: 12,350
elp
2 years ago
Price is also trading way outside its monthly top bb too. Evertime its done it in the past, the following month price has corrected. TY 4 posting your charts!
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jangseohee elp
2 years ago
that is what i call EMOTIONAL indicator :)
and i don support Vertical price movement for extended amount of time
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shenkw85
2 years ago
Totally agreed. Looking on daily, weekly and monthly. The DAX is looking quite over-stretched,
The correction seems just in time. Would expect a correct below the 11,000 mark.
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YaKa PRO shenkw85
2 years ago
agree with the circa 11000 mark if correction is initiated.
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YaKa PRO
2 years ago
Highly probable is no certitude.
There is an excellent game plan here, better than at 11,850 and more complexe (so better).... But there is no certitude it wont move to 13,200 vertical.
The DAX is currently moving 400pts per week on average over the last 10weeks.
It means that over 2 weeks anything is possible really. You can make a killing or get smoked and that needs to be reflected the sizing or stops.
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this is also the first time in history that the DAX had 9 up-weeks in a row...
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YaKa PRO brianhimmelstrupnielsen
2 years ago
Interesting Brian.
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jangseohee
2 years ago
Dr. Draghi has broken the medical rule again and go for maximum Voltage to bring DAX alive??
snapshot
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Excellent analysis Yacine, thanks for sharing.
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Hi Yacine, great analysis. But if you must be in equities, what would choose, U.S., Europe, Asia? In other words, in your view whos going to outperform in the coming months to year...?
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YaKa PRO Technician
2 years ago
Hi Technician, I am not sure i have the answer but clearly it depends of the currency performance too.

My thought process would be:
- So far, back in USD, SP500 is the best peformer and DAX the worst...
- From here a shakeout in equities could also occur with a shakeout in USD vs JPY and EUR.
- If you believe things will normalise in pricing, DAX has still a lot to catchup versus SP500.

It is difficult to conclude but after the next correction I think I would buy DAX but would watch EURUSD.
If DAX corrects while EURUSD Jumps back to 1.1800, I would buy DAX and hedge EURUSD at the same time.
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Technician TOP YaKa
2 years ago
Yes make total sense. If USD continues to outperform (normal as monetary policies diverge between europe,japan and U.S.) and yields rise. Money will probably flow to Europe and Japan(just started QE)
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YaKa PRO Technician
2 years ago
But I am going to answer a question you did not ask:
In the big picture we may have some syncing process with europe catching up but I think the bulk of the rally is behind in time and price and we shall have either a large correction or at least some flat/down trading for a while until 2017.
Apple 150 yours
SP500 2150 yours
DAX 13000 yours
Biotech may have a last climax to very high levels in Sep15 but after that it may the end on all indices.

I think it is the end.
To be honest, i thought that in Oct13 and was wrong.... I had this idea in mind of July/Oct14.. it did not move much since that in USD, Sp500 is still in the same area and DAX computed in USD hardly moved but it is optically strong due to currency devaluation.
This virtual strength may last for a while and support the markets that are already on or close to target but overall I think we are due for a correction (be it flat: note that UK has not moved for 2 years now).
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Technician TOP YaKa
2 years ago
I agree, that we will probably have a hefty correction, some kind of 20% one(in the U.S., and a less in Europe due to money flows) .. i have been looking for a top in the U.S. market for a while now so you're not alone ;).
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Pashabxl PRO YaKa
2 years ago
Well If I may add a little bit of macro economic datas because everything is not Chart/ Fib or other Indicators, keep in mind that ECB is trying to import inflation through commodities and for that ECB is trying to devaluate EUR against USD but because commodities prices are already very low ECB bet on a 85 USD for WTI which is not the case and a EUR at 1.15. But WTI is bellow the forecast of ECB and ECB is now forcasting a 0.85 to 0.95 for EURUSD parity. The second issue is that FED will increase its interest rate because of QE1+QE2+QE3 and the inflation is not based on prices but rather on monetary mass. You have to absorb that maount of money that you spread in the market. When FED will increase its interest rate, there will be a move to USD therefore a natural devaluation of EUR. IT menas that EUR may go well bellow 0.92 and 0.86.
On the index from, as soon as FED increases its interest rate, DOWI and SPX may face a gentle correction as well as DAX FRA40 AEX. But because of ECB's QE, I think that after the gentle correction, until June 2016, we may see DAX at around 12600, FRA40 at 5500 and AEX at around 550 before a correction. DJI SPX are too high to continue to enter long, and DAX FRA may continue to benefit from ECB QE and cheap EUR until 1Q16
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Technician TOP Pashabxl
2 years ago
Yeah buts lets remember that when the U.S. introduced QE it was the best available destination for money, but that was in a zero interest rate global environment, and sluggish growth everywhere, so there were no other alternatives. So the main difference now is that Euro introduces QE in a different environment, as yields in the U.S. will probably start to increase further( economic growth in a better shape) So its not the same conditions.
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YaKa PRO Pashabxl
2 years ago
Yes Correct.

DAX 12,600 is next door, it could do it next week as the ATR is 400pts a week.
But I got your point, if they end up cutting rate (which is in the cartons as it stands) and if the QE in europe maintains rates very low or negative, in principle EURUSD should dive... and if it reaches 0.85 as you mentioned and if equities did not take a large hit in the US than we may see 13,500/14,000 especially if the bullish posture lasts until Jun16.

As per the timing my idea was:
- Correction 10% in the next 2months.
- Rally until Sep15.
- Resilience drift Until Feb16 and then 20% correction.

But things are crazy and I am not sure what's coming next. In the cartons:
- China trouble?
- Grexit that would bring Italie/Spain back in focus?
- OIl at 25 with higher tensions in Brasil/Russia?
- Oil disrupted by some crazy act of Isis.
- Other Geopolitical issues?
- QE failing in europe?

It seems the market got immune to risks but this may not last and real events may occur.
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Technician TOP YaKa
2 years ago
Thats why its pretty hard to trade on fundamentals
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YaKa PRO Technician
2 years ago
I agree - Not always easy to assess - but I believe fundamentals are key (Or the psychology they create which can play in reverse).

I like to know what news is encapsulated in each candle to be able to assess the energy available and see how different markets move relatively.

It is very interesting to see how negative the market was about Europe until the very last minute of QE announcement. It has magnified the effect in reverse of the desinflationary stance.

These QE are often much more impactful on equities than the crisis they come to fix.

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Technician TOP YaKa
2 years ago
and this is the ugly truth. Unless if we see one day that QE have done harm and not good... as policy makers ignored structural reforms to playing and experimenting with money supply(might be dangerous)
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What really "worries" me, is that the DAX is near the same levels in RSI and distance to MA200 as it was back in 2008 before the crash....
(my BMADP is just a corrected Kairi indicator measureing the distance to the MA200)
Plus the dax is more the 300 points ABOVE the bollinger band top on a monthly chart....in my eyes it all cries for correction.
GER30 monthly
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YaKa PRO brianhimmelstrupnielsen
2 years ago
The right comparison is what happened form Sep99 to Mar00. It was probably extreme but it happened.
So in a configuration like this one, there is a high probability the market will recede, there is a small probability it is doing something as extreme as Mar2000.
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YaKa PRO
2 years ago
Confirmation Local top in place on tonights close
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shenkw85 YaKa
2 years ago
One the 11,800 level is broken, the momentum for corrections should should increase accordingly....
snapshot

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