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

(Click on image to enlarge)

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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