German DAX Is Looking For Further Rally: Elliott Wave Analysis
May 17, 2022

DAX

Hello traders, today we will talk about german DAX from Elliott Wave perspective, which is looking for further rally and bigger recovery. After recent Elliott wave complex W-X-Y corrective decline, DAX formed a nice Elliott wave bullish setup formation. It can easily send the price up to 15500 – 16000 area or higher.

The WXY is a complex Elliott wave that is subdivided into three minor waves. This is a complex correction involving two types of corrective structures. The first leg wave W and third leg wave Y are both zigzag. We can call this specific pattern a double zigzag. We can consider WXY as a 3-3-3 pattern. The first (W), second (X), and third leg (Y) all subdivide in 3 waves a-b-c. In the simplest term, these are two zigzag corrections linked together in WXY. Despite the complex subdivision, this is essentially also a 3-swing correction labelled as WXY if we just focus on the main degree and not the subdivision.

Complex WXY Corrective Decline

DAX made an Elliott wave impulsive five-wave rally back in March, followed by an Elliott wave complex 7-swing A-B-C-X-A-B-C correction. It actually suggests more upside, especially after recent rebound perfectly from projected golden 61,8% Fibonnacci retracement and former wave 4 swing low 13288 support zone.

Bullish Setup On DAX chart

As you can see, DAX looks to have a completed Elliott wave complex W-X-Y corrective decline. It’s most likely back to bullish mode as risk-on sentiment can be back in the game. We can actually see it already breaking channel resistance line connected from previous highs, which can be signal for a bullish continuation. However, real bullish price confirmation is above 14319 region that can later send the price up to 15500 – 16000 area.

Happy trading!

DAX is in positive correlation with EURUSD that is also trading at strong support. Check our chart HERE

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