DAX Holds Below 13800 Resistances
21 July 2020
DAX is holding well below its resistance at 13800 levels, which was marked around February 2020 highs. The counter trend rally which had begun from sub 8000 levels since 10 March 2020, has managed to reach the 13100 levels.
DAX probable wave counts on the 4H chart are as follows: The indice had dropped from 13800 levels through sub 8000 between Feb-March 2020, in 5 waves. That was an impulse wave labelled as Wave (1) on the chart here.
Normally a 5 wave structure should be followed by a 3 wave corrective phase in the opposite direction. DAX has managed to produce a corrective rally between 8000 and 13100 levels until now. The indice should face resistance around current levels.
Also note that DAX has managed to rally up to fibonacci 0.88 retracement of Wave (1), which is the last important level for a potential bearish reversal. High probability remains for a bearish bounce from 13100/50 levels, going forward.
Immediate price support lies around 12500, while strong resistance is seen around 13800 levels respectively. A break below the 12500 would be required to confirm that a major lower top is in place around recent highs (13100).
Traders might be preparing to sell fresh around 13100/50 levels, with a protective stop around 13800 mark and projected target below 8000 levels in the next few months to come. Only a break above 13800 would nullify the bearish structure.
Prepared by
Technical Analysis Team
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