DAX 30 Creates ABCDE Triangle Pattern In Wave 4

The German DAX 30 index made a bearish pullback within the uptrend as expected. Price action seems to be completing an ABCDE expanding triangle pattern within a wave 4 (grey).

Let’s review when the uptrend is confirmed and when this bullish outlook is invalidated. 

Price Charts and Technical Analysis

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The DAX 30 is bouncing around the 21 ema zone on the daily chart. This corrective pattern has respected the 38.2% Fibonacci retracement level, which is typical for a wave 4 (grey). 

  • Before the correction, price action made a strong bullish impulse which is probably a wave 3 (grey).
  • The DAX is probably in a wave 4 (grey) as long as price action remains above the 50% Fibonacci level.
  • A break below the 50% Fib places it on hold (orange circle).
  • A break below the previous tops (green box) and the 144 ema invalidates this current wave 4 (grey) outlook but a wave 4 pattern on a larger price swing remains possible.
  • The bullish targets are located at the -27.2% Fib target at $16,000 and the -61.8% Fibonacci target at $16,750.

On the 4 hour chart, price action completed an ABC (blue) pattern in wave A (orange) before expanding it with an ABCDE pattern:

  • If price action breaks (orange arrow) below the support trend line (green), then it could make a new lower low within the wave E (orange). 
  • A bullish bounce (blue arrow) at the long-term moving average is expected.
  • If price action manages to break above the 21 ema zone (green arrows), then the wave E (orange) has probably been completed at the recent low.

(Click on image to enlarge)


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