Wednesday, 11 August 2010

11:36 BST - Dax Update - Possible top in the Dax?

In my last post on the Dax, there seemed to be a possibility that a top could be near, although it was by no means certain. Since then, we did make another new high, as was expected under the elliott wave count, but it was not much higher than where we were at the time of that last post.

In the light of subsequent action, I've relabelled the 15 min chart to show a straight impulse wave up from the minor B wave low at 5906.04 to the current high at 6386.97. Please refer to the previous post for the daily charts and a wider view of the 15 min chart - the one below zooms in to look at the move from the minor B low:

Dax 15 min:

You can see that from the current high at 6386.97, there appears to be 5 waves down, followed by what has to be a corrective retracement up to 6356.41 (since its now dropped below the low from which it started).

At the moment, this could just be a correction of the rally from the minor B low if wave C is extending or if the bullish alternative I referred to in the previous post is playing out, where that low is wave (X) preceding another zig zag up.  In this case, the high at 6386.97 could be  [i] of C or it could be minor A up or just [i] of A.

As I mentioned in that last post, assuming that wave B, or (X) on the bullish count, was a triangle as shown, we need to drop below the end of the triangle at 5906.04 in order to avoid the rally from there being only part of minor C on the bearish count or all or part of minor A up on the bullish count.

Until we take out that low, the risk of a larger C wave on the bearish count and the bullish count remain on the table.

Assuming we've topped, if we're in wave [3] of iii down on the bearish count, as my labelling speculates, a wave [4] of iii retracement must not end above the wave [1] of iii low at 6275.32. Taking that out on an assumed wave [4] will be a sign that this count may be wrong and that wave C is extending or that the bullish count may be taking hold.

If we get [4] and [5] down to complete wave iii, I'll then be watching the wave i low at 6244.69, since a wave iv retracement must not end above that level.

So, the bearish count is starting to look OK at the moment, but is not assured. We just need to keep an eye on the levels mentioned above and hopefully, doing that will keep us on the right side of things. If waves don't follow through as expected for the bearish count, that's a warning that should be heeded given that until we drop below 5096.04 on the labelling I have, there could be more upside to come, even on the bearish count and the bullish count remains very much alive.