Wednesday, September 9, 2015

DAX context - 09/09/2015

This August has brought very volatile market conditions. The sell off didn't surprise me as you can see in my previous post, I couldn't rule out a bigger drop (dax ld+flat). This flat can be drawn a little more complex, but I think it doesn't really matter. At that time the market was in an absolute 50-50 situation in my reading. After this the market first moved upward but failed to pierce through the critical level needed to trigger the continuation of an immediate long trend. 

I decided to update the context because the drop so far doesn't look like an impulse wave. I can't exclude a 1-2-[i]-[ii] situation though, but right now this drop looks corrective.

If you take a look at the monthly chart, you can see the drop stopped at multiple support zones. The 38.2 Fibonacci level, the upper line of the base channel and the previous wave (IV) zone was right there. We saw the first break below the trend line created by the RSI and the momentum came down to the bullish support zone. This movement is pretty much equal in points and time with the possible wave II (see boxes). So if the market wants another high or test of the high this is the place for it. Just a thought on what if the market takes out the low (and especially if it closes below that level on weekly of monthly chart). then I think a trend reversal is most likely and at least a bigger correction should develop with the target level of 8500 as the end of wave 3 of (A).

DAX (CFD) monthly chart
The weekly chart shows that this downside movement didn't reach the ideal Fibonacci extension level for a wave 3, thus suggesting that this is going to be either an A-B-C, or 1-2-[i]-[ii] situation. The only problem with this interpretation is the corrective channel, which was broken. In this case always have to watch out for a channel test.  This is just a warning sign so far that should make you think other possibilities as well. But I think this happens quite often after a leading diagonal followed by a flat correction. (Another thing to consider is that the monthly candle didn't close outside of the channel and a monthly line chart also didn't confirm a break of the channel yet.)

DAX (CFD) weekly chart
Since the local low the market created a range, which was pierced upward by today's opening. This tells me that at least a wave (c) of [ii] can be expected, but can't rule out even higher prices though, especially if today the market will create a runaway gap on the daily chart. The momentum on the daily charts shows signs of climax at low. If the gap will stay open, the market should reach at least the 9700 level this week, but in this case the market should ideally test the 11k as a significant Fibonacci and psychological level.

DAX (CFD) daily chart
I show you an alternate version on the 4 hours chart. Yesterday the market was at the top of the range. I could count a full flat correction, but the upside movement didn't yet confirm that. Although today the market tries to break out of the range this bull trap is still an option. The rest of the week will decide that I can rule this out or not. Today's price action will be crucial, because a runaway gap would a nice reference point for the bulls.
DAX (CFD)  4 hours chart
I also want show you a 5 minutes chart from yesterday. This is what I wanted to play out from the context of the 4 hours chart. I expected a pullback and a zig zag pattern to unfold to the zone shown on the chart after a possible leading diagonal. I wanted to shot the upward wave after a higher low, but I missed the entry, but Today's opening ruled out the LD shown on this chart, and the whole complex flat idea is questioned as well.

DAX (CFD) 5 minutes chart

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