Thursday, 5 August 2010

11:32 BST - Dax Update

Following on from my post yesterday, here's an update on the Dax in the light of its new high above the April high. I've revised the bearish count to something that I think looks a little better, but it doesn't make much difference to the bearish alternative I showed yesterday in the event of a new high:

Dax Daily from March 2009:

It has us now in minor wave C of intermediate wave (Y). Here's a closer look on the daily chart:

Dax Daily from April 2010 high:

Wave C appears to be in its 3rd wave. If wave C is forming as a straight impulse, there could be alot more upside to go. If its forming an ending diagonal, the upside could be more limited.

Here it is close up on a 15 min chart from the high of the [b] wave within the triangle:

Dax 15 min from April 21 June high:

The labelling of [iv] of C is only provisional at the moment - we may still be in [iii]. If the next pullback drops below the high of wave [i], we could have seen a completed impulse up, or we may just be forming an ending diagonal. To be a valid ending diagonal, wave [iii] must not exceed 6406.79.

The position of the peak in the MACD shown by the vertical blue line, may indicate that where I have wave [iii] labelled is the correct position, but we'll have to wait and see.

With the trend still firmly up on this index, the safest short opportunity would be once we see an impulsive 5 wave decline followed by a 3 wave pullback. Until then, the risk of higher highs remains and will likely do so in fact until the B wave low at 5906.04 is taken out. Obviously, if we are in the alternate count shown, that is much more bullish than the main count, and that alternate remains viable until 5906.04 is taken out, assuming wave (X) was a triangle.