DAX (DE30) Sell below 9900
CMP 9930 Stop @ 10050 TGT 9300 – 8700 - 8028
The
basic pattern of the Elliott wave principle, how price moves not in a straight
line but in a series of rises and retracements. Except for unusual circumstances, price moves in waves and
not in a straight-line run. These waves are like the tide coming in. Price
advances and recedes, advances a bit more and recedes, slowly creeping up the
shore. The outgoing tide shows the wave advance not as far as previous waves,
and withdrawing further. The motive phase is composed of three advancing waves,
1, 3, and 5 and counter trend waves 2 and 4. Following the motive wave comes
the corrective phase. It shows two receding waves, A and C, with a counter
trend wave between, B. The series, 1 through 5 and A through C can be repeated
to show how the tide comes in, or price advances up the chart. If you were to
zoom in on waves 1 and 2, you would see the same 1 through 5 and ABC
combination. You can say the same about waves 3 and 4, 5 and A, B and C (with
the structure reversed). In this manner, the cycle is fractal, meaning the
closer you zoom in, the more motive and corrective phase combinations you see.
If you were to zoom out, say look at the structure from across the room or from
the other side of your yard, the 1 through 5 and ABC combination would take
shape of waves 1 and 2.
From the above monthly chart of DAX (DE30), it started its rally from 2003
bottom from the lower level of 2190 and continues its rally testing the level
of 8150 by year end 2007 December where it formed Double top and in 2008 Circes
sharp correction was seen. This was the correction of the rally in the form of
wave II and tested the lower level of 3590 which was exactly 76.4% retracement
of wave I. after the correction we have again seen the upside move in the form
of wave III and in this wave III there are inter wave where in inter wave also
wave iii is near to completion. Inter wave I started from 3590 and tested the
level of 7600 and from 7600 the correction what we have seen is the wave ii
testing the support of 4965, which is 59% retracement of wave I, near to 161.8%
retracement level. Wave iii testes the level of 10033 which was 121.8%
retracement of wave i and confirming the reversal in the price are expected.
Now if recent high of 10033 is holding will enter in wave iv of inter wave and it’s
expected to test the level of 8028 which we expect 50% retracement of wave i
and holding the high of wave i above 7600 and enter in wave v of inter wave III
and completion of wave III can be seen at 12050 which is 100% retracement of
wave I from the bottom of wave II, which
is expected in long run where.
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