close icon

DAX 30: Time to Be Careful Now

“DAX 30: Stage is Set for a New All-Time High” was published on October 3rd, 2016. While the German benchmark index was trading close to 10 530, Elliott Wave analysis of its monthly chart made us believe the bulls are going to succeed at lifting it above 12 400 in the months ahead. That was over a month before the so-called “Trump rally”, which proves that Ralph Nelson Elliott was right when he said that “the habit of the market is to anticipate, not to follow.

dax elliott wave chart
That is how the German DAX 30 looked like eight months ago. The logic behind the bullish outlook was simple: trends tend to develop in the form of a five-wave pattern, called an impulse. Since the fifth wave – V – of the post-March 2009 uptrend was missing, we assumed the bulls were not done just yet. In 99 out of 100 times, the fifth wave would exceed the extreme of the third wave of the same pattern. Therefore, the DAX 30 was supposed to rise to a new all-time high.

dax 30 elliott wave analysis

On May 16th, 2017, it climbed to as high as 12 841, which is exactly 444 points higher than the top of wave III. Well done, now what? According to the theory, every impulse is followed by a correction of three waves in the opposite direction, which normally retraces back to the termination area of the fourth wave. This means that once wave V ends somewhere between 13 000 and 14 000, the bears should return to cause a 30%-35% pullback in the German blue chip index. From a technical standpoint, it is too late to buy and too early to short, so staying aside appears to be the best thing to do.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

S&P 500: Last Four Moves Made Elliott Wave Sense

Over a month ago, on November 8th, we published an article demonstrating the Elliott Wave principle‘s ability to predict relatively large moves in the S&P 500. As the move in question progressed we decided to take a closer look into its structure to see what is left of it. The chart below was part of…

Read More »

Nikkei 225 Can Lose 30% in Next Corrective Wave

The Japanese Nikkei 225 reached a multi-year high of 24 448 in October 2018. The last time the index traded this high was 27 years ago, in 1991, in the aftermath of the Japanese asset bubble. However, the bulls couldn’t maintain their momentum last year, which opened the door for a decline to 18 949…

Read More »

S&P 500: Triangle Pattern Leads to New Record High

The S&P 500 reached new all-time highs on the back of better-than-feared earnings season and improved US-China trade prospects. The index closed at 3085 Thursday, bringing its 2019 tally to the impressive 23.1%. But was there a way to predict this move instead of just explaining it after the fact? To paraphrase Warren Buffett, the…

Read More »

Insurance ETF Poised for an Elliott Wave Correction

The SPDR Insurance ETF reached a new all-time high in September, helped by a solid job market, increasing wages and rising consumer confidence. The price is up 630% since the Financial Crisis low at $4.77 in March 2009. The question is, can investors trust the uptrend to continue? Regardless of what pundits say, we don’t…

Read More »

Dow Jones Sends a Warning Investors Can’t Ignore

The price movements of financial instruments form repetitive patterns, called Elliott waves. Experienced analysts try to recognize those patterns in order to prepare for the next market move. Sometimes, a pattern can indicate not only one, but the next two consecutive moves. The triangle pattern, for instance, is known to precede the last wave of…

Read More »

DAX 30 Adds to Global Recession Fears

The German DAX 30 index has been declining since early July when it reached 12 656. Last week’s news that the German economy shrank by 0.1% in the second quarter only added to global recession fears. The benchmark index of Europe’s largest economy fell to 11 266 on August 15th. Are investors’ concerns warranted? Or…

Read More »

Dare to Guess the Best Stock Market Index of 2019?

The first half of 2019 saw stock market indices around the globe rebound sharply. In the U.S., NASDAQ, DJIA and the S&P 500 are up 22.7%, 14.8% and 18.9% since the start of the year, respectively. In Europe, the German DAX and France’s CAC 40 both climbed 17.8%, UK’s FTSE 100 surged by 12% and…

Read More »

More analyses