DAX Elliott Wave: German engine rallies again

Zorrays Junaid Alchemy Markets

Executive summary

Bullish bias: The DAX has completed wave ((i)) from the April low and wave ((ii)) is now unfolding as a three-wave correction.

Key fib levels: Expect the (c)\-wave of ((ii)) to target the .236 Fibonacci retracement at 23,080 or .382 retracement at 22,200 before the next impulsive leg up.

Invalidation level: A break above the July 10 high of 24,639 suggests the wave ((iii)) rally has already begun.

Current Elliott Wave analysis

The rally off the April 7 low at 18,489 has subdivided into a complete Elliott wave impulse pattern. Since June 5, DAX has been working sideways in an (a)-(b)-(c) flat pattern.

This flat pattern makes up wave ((ii)).

Within wave ((ii)), we see:

Wave (a): 24,479 → 23,051 (completed)
Wave (b): 23,051 → 24,639 (channelled zigzag)
Wave (c): 24,639 → ? (in progress)

Wave (b) is a big clue that a decline to retest the 23.6%Fibonacci retracement is a higher likelihood. Wave (b) channeled higher in an a-b-c zigzag pattern, a corrective wave. This suggests the entire rally may become fully retraced or mostly retraced.

Once lower levels are achieved, then we’ll anticipate another powerful rally.

Look for wave (c) of (ii)) to finish up near 23,080 0r 22,200.

Bottom line

The DAX remains in an overall uptrend after completing wave ((i)). Look for wave ((ii))’s (c)-leg to finish near 22,200–23,080.

If 24,639 is broken to the upside, then we will consider wave ((ii)) already complete and a wave ((iii)) rally in progress.

Author

Zorrays Junaid

Alchemy Markets

Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus.

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling.

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.