Dax Elliott Wave: Only three waves up, room for another leg down [Video]

Gregor Horvat Wavetraders

The German DAX has recovered nicely over the last two weeks, but the rise from the October 8 low has unfolded in only three waves. That's not an impulse, so I'm not convinced the bottom is in yet, especially with the index slipping back toward 25,100 this morning.

I see this as a more complex wave B, possibly a triangle, within a bigger wave four correction. So the market could stay sideways for a while, but another leg down is still on the cards, ideally into the 24,000–24,600 support zone.

That's the area where I'd look for stabilization and a turn higher in wave five of an ending diagonal on the daily chart. An ending diagonal is a five-wave pattern with overlapping waves that forms at the end of a trend, a sign that the move is running out of steam. So even if we get another dip, the bigger picture still points higher later on.

DAX 4H Elliott Wave chart: complex wave B before another leg down into 24,000–24,600

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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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