Short break!

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I'll be back on Friday night so NO POSTINGS until MONDAY,  24 Oct.

DAX Technical Analysis 2011.10.18

Looking for a zig-zag down correction

Yesterday’s price action of DAX index broke the most recent trend line and declined sharply toward the 5,750 area.

This down move is likely to continue after a correction (up move) that we are witnessing right now. The main support/target zone remains in the 5,500-5,700 area, set by the 38.2% and 61.8% retracement levels of the previous rally.

If the actual resistance zone (5,880) will manage to attract enough sellers, a more accurate target for the down move will be in the 5,600-5,660 zone. There are the late September highs in this area and the 50% retracement level. The 3 waves down move pattern (zig-zag) scenario keeps its relevance up to this point.

A closer look to the most recent price action (last 24 hours) reveals a resistance zone in the 5,880-5,955 area, set by the 38,2% and 61.8% retracement of yesterday’s decline.

Depending on the reversal level that will probably occur in the next hours, we can establish a down target in the 5,600 zone. However, if the buyers will prove strong enough to break through the up mentioned resistance zone, the next resistance is at the previous high, at 6,080 level.  

DAX Technical Analysis 2011.10.17

DAX Index is loosing momentum

DAX Index gained around 950 points (18.6%) from the 4^th of October until now, the most power being in the first third of the move.

The rally is clearly losing momentum as the multiple trend lines (connecting previous troughs) are showing a decreasing slope. In other words, sellers are becoming more visible and buyers are losing optimism.

If the 6,000 – 6,100 will turn out to be the top of the rally, we are expecting at least a down correction, targeting the 5,500 – 5,700 area. Most probable, the down move will be formed of 3 sub waves (as shown on the chart), creating a break-retest-continuation pattern.

    

EUR-USD Technical Anlalysis 2011.10.17

This is a pretty clear Elliott Wave count

As expected last week, the Euro climbed against the Dollar, breaking into the resistance zone 1.3850-1.4000. This is a strong resistance area as it represents the 50%-61.8% retracement of the September down move.

The Elliott wave count points out a 5^th wave in progression that eventually will be followed by a 3 wave correction (down move in this case). The T1 trend line (connecting 2 and 4 troughs) is the dynamic support of this rally and a break of it will signal the correction.

Wave 3 is extended, composed of 5 clear sub-waves, which sets a possible target of the 5^th wave in the 1.3910 zone (wave 5 = wave 1).   

On the shorter time frame (15min), the rally from early October has developed in 5 waves, the 3^rd being extended and the 5^th being in progress. Analyzing the 5^th wave, we can identify four waves already formed and the fifth (wave (v)) still developing.

The most probable outcome is a 3 wave down move (correction) as soon as wave (v) and 5 will be ended. However, the top of the move cannot be exactly identified, 1.3910 level being a good resistance zone. A larger resistance zone is ending at 1.4000 level.