Wednesday, 27 June 2012

Dax in upward correction

Today we take a look at the German DAX index. The wave counts and possible wave scenarios are very similar to the US S&P and DJIA indices as previously discussed here. DAX has made a 3 wave upward move from June lows. This move was either the entire wave II or just the first part of the wave II correction. 

Support is found at the 6050-6100 area. Resistance lies at the June high of 6427. A move above 6312 will increase possibilities that we are in a more complex correction of wave II and the index will break recent June highs. Our view is downward biased for the longer term since 5 waves have completed from March highs. The fact that this decline lasted almost 3 months, cannot be corrected in just 3 weeks. I think it needs more time to correct this move. That is why I believe the wave II correction is more complex and far from over. Bears should be very cautious as a move above June highs is possible. Breaking support levels and June lows will only strengthen the scenario that wave II has been completed..

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