DAX correction deepens as Elliott Wave signals more downside

Gregor Horvat Wavetraders

DAX is slowing down and is now trying to break the support line of the impulsive channel connected from the March swing lows. Apparently, we are moving into a higher degree correction, as the current decline can be a leading diagonal formation in wave (A). Of course, this means that at some point in the future we should still expect some kind of stabilization, but for now there seems to be room for more weakness within this ongoing three wave (A)(B)(C) decline. However, now that it can be finishing a leading diagonal into (A), we may see some corrective recovery within wave (B) before a continuation lower in wave (C).

I think this correction can even extend back towards the previous fourth wave support around 23600, or possibly even into the 23170 to 23000 area where we have a major gap. As you know, whenever those gaps are filled they can often provide a very interesting and powerful rebound. Because of that, it is very possible that after this decline is complete, we will see a new turnaround later on. This would also fit well with the higher degree outlook, where we still think that all-time highs can be retested, possibly still this year, as part of a larger degree wave five shown on the daily chart

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Author

Gregor Horvat

Wavetraders

Experience Grega is based in Slovenia and has been in the Forex market since 2003.

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