Executive summary
Bullish bias: The DAX has completed wave ((i)) from the April low and wave ((ii)) is now unfolding as a three-wave correction.
Key fib levels: Expect the (c)-wave of ((ii)) to target the .236 Fibonacci retracement at23,080or .382 retracement at22,200before the next impulsive leg up.
Invalidation level: A break above the July 10 high of24,639suggests the wave ((iii)) rally has already begun.
Current Elliott Wave analysis
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The rally off the April 7 low at 18,489 has subdivided into a completeElliott wave impulse pattern. Since June 5, DAX has been working sideways in an (a)-(b)-(c) flat pattern.
This flat pattern makes up wave ((ii)).
Within wave ((ii)), we see:
- Wave (a): 24,479 → 23,051 (completed)
- Wave (b): 23,051 → 24,639 (channelled zigzag)
- Wave (c): 24,639 → ? (in progress)
Wave (b) is a big clue that a decline to retest the 23.6%Fibonacci retracementis a higher likelihood. Wave (b) channeled higher in ana-b-c zigzag pattern, a corrective wave. This suggests the entire rally may become fully retraced or mostly retraced.
Once lower levels are achieved, then we’ll anticipate another powerful rally.
Look for wave(c) of (ii))to finish up near23,0800r22,200.
Bottom line
The DAX remains in an overall uptrend after completing wave ((i)). Look for wave ((ii))’s (c)-leg to finish near22,200–23,080.
If24,639is broken to the upside, then we will consider wave ((ii)) already complete and a wave ((iii)) rally in progress.
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