In today’s article we decided to look at the German DAX, as it has made a very clean, textbook-style reversal over the past one to two months. If you are our member, or if you follow our webinars on YouTube every Monday at 15:30 CET, then you know that despite the very strong decline seen in November, we stayed patient and focused on the price action. Throughout that period, we consistently highlighted that the 23k area remains a key support.
We shared this chart above with members already at the end of November, when price was still under heavy pressure, and we were carefully observing signs of stabilization.
As you can see, just a few weeks later the market delivered a very strong rebound from the 22900 area. In fact, this rebound unfolded as a bullish impulse and even attempted to break the descending trend line resistance in mid-December.
We labeled that move as wave one. What is important with this approach is that even after such a strong rebound, many would assume that most of the move is already done. However, from an Elliott wave perspective, when a correction is complete, the following impulse often retraces the entire correction. That is why we viewed the pullback in the second half of December as wave two, signaling more upside ahead and opening the door for a continuation toward new all-time highs.
So far, price is trading close to the 25k area. The key question now is whether this trend is already coming to an end. At this stage, it does not look like it. We are still missing the full completion of a five-wave structure from the 22900 lows before the broader cycle can be considered complete. Looking higher, an important upside level to watch comes in around 25500.
Grega
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