The German DAX declined in January and tested several support levels, but it is important to note that the index formed a clear three-wave move down toward the 24,100 area. The market stabilized nicely about two weeks ago and most likely completed wave four. If this view is correct, we can still expect further upside, as wave five may still be missing. However, keep in mind that this advance could represent the final leg of a higher-degree ending diagonal, as illustrated. At the moment, the market appears to have a B-wave pause away from the gap, and it can be either forming a bullish triangle or deeper irregular flat correction. Once wave B correction fully unfolds, we should now see a wave C move higher, as long as the index continues to trade above 24,100.
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