Thursday, 10 June 2010

8.30 BST The Dax

The Dax has been strong of late. It nearly retraced the entire drop that occurred on the infamous "flash crash" in early May. But as a result, unlike most main indices that I follow, it can't be counted as 5 waves down from its high. Its either a [i],[ii],(i), ii) or a leading diagonal (but it has a long way to drop to qulaify as a leading diagonal - for its 5th wave to be longer then its 3rd wave, it needs to take out 5445 -ish - currently it is at 5930). Here is the [i],[ii],(i),(ii) count on a 60 min chart:

This is what it looks like on the 15 min chart:

The main count suggests that we should start [3] of i of (iii) down soon, but as you can see, there is an alternative that makes the recent low merely a wave x in an on going wave (ii) correction which would likely take out the recent high at 6114. I've marked a head and shoulders pattern on the chart which has a target of about 6054. If it fails now, having broken above the neckline, that would probably be very bearish.
Finally, an even closer look on a 5 min chart: