If we analyse DAX in longer term according to wave theory we can spot two possible scenarios:
- ABC correction may have anded and DAX i soming back to growth;
- Big ABC correction didn’t ended and C point will be lower than 2 months bottom.
Both scenarios have some points behind them. New growth wave is possible because there is lack of fifth bullish wave (in the impulse since 2009). There is also three-low pattern (on the weekly chart) supported by long term bullish trend and volume. Despite the fact volume is getting smaller last weeks on W1 candles it is still bigger in comparison to weeks earlier.
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Correction which may have ended had form of simple correction and third wave is a little more than 127.2% of the first one. If now started new bullish wave we are currently in the first one. Due to the fact low form the end of September exceeded by few points August low we can exclude few other scenarios. After current first bullish wave there will be a correction one which often retrace 76.8 to 88.6% of the first one but it cannot beat September low.
Trend on DAX helps second scenario. Since April 2015 index is in bearish trend and we observe lower highs and lows. There is also a possibility that big capital investors want to scare off individual investors and took them some money by activating their SLs which are now below September lows.
Both one and second scenario predict some losses soon. Correction will show further direction of DAX because it will determine which scenario is true right now.
