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Showing posts with label DAX. Show all posts
Showing posts with label DAX. Show all posts

Thursday, December 4, 2014

Elliott Wave Analysis of DAX

The move from 9159 appears to be in a 5th wave, a closer look reveals the prior price action is a sideways messy pattern, i strongly suspect its a triangle, I initially thought the pattern has ended at the point where I marked wave b, but its since morphed into a larger triangle.

A spike to new high is all that is needed, although I suspect this will attempt to make a new all time highs.



A spike higher, then a strong reversal back under 9950 is what i am looking for.

Sunday, January 26, 2014

Market Report: Dow Crashes 450 in 2 Days

Anyone reading that headline would think it's some sort of surprise to most traders that the markets crashed 450 points in 2 days, but for us a wavepatterntraders.com we have been looking for a reversal in the markets for a few weeks and it was only a matter of time before things reversed. So it's no surprise to us, it was expected and I expect much more if a top is in place.

Is this the start of the large move lower that I am expecting? Well to answer that question honestly, it's too early to say, but regardless of the answer, what we can say for sure is that if it is the start of something sinister, we will be riding it lower.

In my last few articles I left readers with the idea of a potential JPY carry trade reversal. The analysis holds true today as it did the end of last year. I am a big believer that if the JPY carry trade unwinds, we will see much more downside in the markets, it will make last week look like a picnic, if the markets have indeed topped out as we expect they have, then its only just getting started. I urge all bullish traders and investors to pay attention to the JPY carry pairs, particularly USDJPY, those that understand the drivers of the market should be fully aware that the past 12 months it's the JPY carry trade that has helped stocks push to current levels.

Just as the markets move higher due to the borrowing of JPY, they can easily reverse lower as margin calls get called in as the selling forces more and more sellers to cover those margin calls. It's a self-fulfilling spiral that once it gets going is very difficult to stop until the sellers have been washed out.

SPX long Term

Preferred Idea

SPX Long term Preferred Count Chart
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I have posted this chart before, but as a recap I will post it again. If the trend from the March 2009 lows is only a 3 wave move, then the likelihood is that it's a B wave of a possible expanded flat pattern.

For those traders that argue that the March 2009 lows will never be seen again, I merely suggest you check the history of the markets, 2 examples are the 1966-1974 bear market, the market made a new high in 1973 and then made new lows, the other example which many investors are probably aware was the decline from 2000-2003, which made a new all time high in 2007, then subsequently crashed under the 2002/3 lows.

I think it's very naive to outright say there is no chance that the US markets can't revisit the March 2009 lows.

Look at it like this, when Gold was at $1900, I bet many thought it was a sure bet 100% that Gold was going to $2000, so at the time if you said Gold seeing $1180 was a possibility most Gold investors would have laughed in your face, 2 years on and Gold investors are not exactly pleased.

Put yourself in the position of those Gold investors, do you think that US stocks will be going up indefinitely?

And there is no chance of a move lower?

Bullish Alternative Idea

SPX Long term Bullish Alternative Count Chart
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Even if I am wrong and this will end up being a 5 wave impulse from the March 2009 lows, that still implies we will see a 4th wave pullback, so a large move back towards Dow 14500, SPX 1550 should be seen. Do you really want to be caught holding the bag and suffer a pullback to 1550SPX?

Short Term

SPX Dhort-Term Chart
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The 1st bearish clue would be a 5 wave decline from the highs; Friday's mini crash suggests it's still inside a small 3rd wave, so we want to see a 4th and a 5th wave to complete a 5 wave impulse wave, if that is seen it will be a strong clue of a trend change, the minimum target would be 1550SPX.

Whilst we don't have any crystal balls we do have a mine in the sand, if the market continues lower as we expect then we will look to see the bounce for a 4th wave and look lower for a 5th wave, then we should see a corrective 3 wave bounce as shown.

All is not as it seems

If you look around the globe and "under the hood" you can see all is not as is seems, whilst some US markets have made new all time highs, that can't be said for many other markets.

XLF

XLF Chart
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If you look at the XLF we can clearly see that it's lagged the SPX and by any criteria you want to choose in my book that's a bear market rally. We can clearly see it's a 3 wave bounce, so by definition it's a corrective bounce in Elliott wave terms, furthermore it's virtually met its measured move target where [C] = [A].

SPX versus XLF Chart
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Not exactly screaming a bull market is it?

We think the XLF could be a great set up to sell, if it's just put in a peak, and topped, then I am expecting a strong move lower. That's one sector I suggest readers watch for weakness.

NYSE

NYSE Chart
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The NYSE is a very important US market and is often over looked, but as we can clearly see its only "just" tested its Oct 2007 highs, if that's a simple double top, then we could be on the verge of a strong move lower, again another market I think investors and traders should be watching.

Do you notice the look? It appears to be in 3 waves and only just above the measured move target where [C] = [A], so whilst the SPX and DOW have got all the headlines if you look around thins are not what they seem.

Around the world

What about other markets that "used" to closely follow the US markets?

CAC40

CAC 40 Chart
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That sure looks like a 3 wave bounce to me, if you are an Elliottician and reading this, I will gladly debate the merits of a potential 5 wave move from the March 2009 lows, because I can't find a way to label that even remotely as a potential 5 wave impulse wave, it's a clear 3 wave move, so in Elliott wave terms a corrective bear market rally.

Incidentally we think this a great market to look to sell and if we can count a small 5 wave decline from the highs then we have a strong clue of a trend reversal, I am targeting 2500, so plenty of downside.

There are many other markets and stocks that suggest the move from the March 2009 is a 3 wave bounce, a 3 wave move is important to Eliotticians as it suggests it's a counter trend bounce.

So you are probably thinking, well you have just picked the markets to curve fit your bias. Why don't you pick a market that has made new all time highs?

Let's do that, what about the DAX, is that ok with you?

DAX

DAX Weekly Chart
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Do you notice the look; it sure looks like a 3 wave move to me. Do you see a 5 wave move there? Furthermore it is only just above the measured move target where C = A.

So whilst it's made a new all time high, it can be considered a B wave of an expanded flat pattern and if the pattern is correct we should see a strong move lower.

DAX Monthly Chart
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I have been targeting this box area for a few months, but if the DAX fails to continue higher and we see a closing print under the top of the box, I would consider that as a bearish sign, especially if we see a bearish candlestick such as a shooting star or a bearish engulfment, on a monthly scale that's a strong signal.
Now let's look at what is happening in Europe.

DAX versus CAC and EURSTOXX Chart
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The CAC and EURSTOXX50 sure don't look like a bull market to me, what do you think?
So having followed each other for years, we finally see a divergence between the DAX and the rest of Europe; I would say that's a pretty convincing statement to say something is wrong with the move in the DAX.

Whilst we will trade the markets both long and short, when you look at the bigger picture around the rest of the globe, both in stocks and other closely linked markets, it sure don't look like a bull market in many other sectors and world markets.

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Conclusion

The markets potentially have a peak in place, the evidence last week was encouraging for the ideas we have been using, however we need to see a 5 wave decline 1st from the all time highs, until we have that we don't yet have a strong clue of a trend change, if we do see more downside, it's likely to be much larger move that many think, with so many traders now addicted to buying the dip, Its sure to surprise a few traders, as it did last week.

Until next time,

Have a profitable week ahead.

Wednesday, January 1, 2014

Elliott Wave Analysis of DAX (short term)

Short term it appears that this is close to ending wave [iii], so a pullback should be close for wave [iv], i am targeting around the 9500-9450 area, although it will be decided on the form of the decline.

Once wave [iv] is in place we should then see a new high for wave [v] where upon a large decline is likely setting up to at least 9000, much more if my primary idea is correct.

The market is so weighted to one side and whilst we have been trading this current move to the upside i will be advising to be looking at long term puts once we can see a 5 wave advance completed from 8985.

I will be getting very aggressively short at the end of a 5 wave move from 8985, although short term i am looking to be buying some short term calls and get long on the end of wave [iv] and trade the 5th wave to new highs.

A strong decline under 9400 starts to be a concern but only if its a strong impulsive decline, then the bulls should most definitely have cause for concern.


The ES is virtually the same idea.


Monday, September 9, 2013

Elliott Wave Analysis of DAX

I posted an idea a few weeks back on Stock Twits, see here: http://stocktwits.com/message/15396043

We we did see a bit higher, but the resultant dump thereafter suggests that the triangle "thrust" is over and its was a much shorter move than i expected.

I initially thought we would see above 8600, as i had remained bullish for sometime looking for that new yearly high.

Alas it appears that its a truncation.

So off the highs we have seen a strong impulsive dump, i can count a 5 wave decline from 8450, currently we appear to be chopping higher in a very corrective advance.

So unless something amazing happens and it can rally above 8450 I strongly suspect we will see much much lower prices.

So the trade setup is to sell a move above 8300 and build shorts, stops at 8450.

Nothing hard, it either works or it don't, if the US markets, aka the SPX/ES fails around the 1670SPX area and we see an aggressive move lower, we should see the DAX follow.


If it fails to get above 8300, then traders can look to follow it lower and get short under 8175, although bear in mind it might still morph and  a "sneak attack" back to 8300 can be seen.

The only safe stop at the moment is at 8450.

Although that maybe too large for some, but the next expected downside target is well under 7500.

This is NOT a day trade, its geared for swing traders. i personally don't day trade, the setups i find are for members/traders that have limited time and only want to leave a trade running for a few days/weeks.

Most people are not suited for day trading IMO.

Edit - I actually traded this idea, and sadly (well for my account) got run over, the strength was impressive , but things do go wrong and that's why we have stops.

Saturday, August 10, 2013

Elliott Wave Analysis of EURSTOXX & CAC

Looking at the other 2 markets that track with the DAX, we can make the case of a potential 5 wave advance ending from the June lows.

Although its not as clean as i would have liked, the overall look is similar to the move we have seen on the DAX.

So i supect that we are close to reversing on these markets as well, although we have no real downside to suggest that. Currently the only market we have seen weakness is the DAX, so we have a divergence between the 3 markets in Euroland.

CAC


4100-4170 is a big area of resistance

EURSTOXX


We can clearly see the DAX is the weaker, so a divergence between the CAC and EURSTOXX, the CAC is the only market to make new yearly highs, the other 2 markets are below there respective highs.



Is the DAX leading?

Elliott Wave Analysis of DAX

The move from the June 24th lows appears to have ended a 5 wave advance, the reversal from 8437 looks impulsive, so a good clue to the trend having traversed, the subsequent bounce from 8227 is corrective looking, so fits well as a corrective bounce for wave [ii], its also retraced 61.8% of the prior decline.

Simply put we need to see a strong breakdown under 8200 and for it to remain under 8437.


If we did see a strong breakdown on Monday, that would help create a gap down for our ideas on the US markets, and help the bearish case. So its important for the bears to see some weakness in the European markets on Monday.


I guess readers can see the obvious H&S, although its a coincidence it aligns with an Elliott Wave pattern.

The one interesting fact is the DAX failed to make a new yearly high (so far), if that is the case then its a non-confirmation with the SPX. The FTSE so far has also failed to make a new yearly high, but i was not expecting it to, i was targeting the 8600 area on the DAX, but a truncation could be in place, if so its a bearish sign.


If you are looking to trade the DAX next week, simply stick a stop at 8437, above that area its wrong.

The risk is small if this idea is correct, and a break of 8200 is looming, risking 100 points or so to make 400-600 is the sort of trade that i look for.

How about you? You interested?


Saturday, April 27, 2013

Elliott Wave Analysis of DAX, CAC & EURSTOXX 50

Short term there still appears to be some missing pieces to the advance, i suspect the decline we have recently seen is a small 4th wave pullback, so a new high would complete a 5th wave advance and a cycle from the 19th April low.

Unless we see something that really suggests an aggressive reversal, the odds still favor more upside before a pullback to at least correct the advance we have seen so far.

So ideally early next week we see further upside to make it a 5 wave advance on all 3 markets.


Wednesday, March 13, 2013

Elliott Wave Analysis of ES (short term) & DAX

The last few sessions have created some issues for traders, not only is it contract rollover week, we have diminishing volumes, this is normal before a new contract, and i have found over the years some big moves tend to happen just after the new contract is fully in place, although most traders have moved into the M contract now (June)



From last Fridays decline we have seen a nasty series of chop, and its not clear how this is shaping up, my initial reaction is a triangle, but that still lacks structure and wave [c] needs to come back to around the 1540ES area

If i had my way we would test1535ES, but this market is not exactly respecting what i am saying atm

It was working great, then me and the market had a fall out, errr whatever the reason we don't have a clear view just yet

I suspect its still working wave [iv], as when we look at the DAX we have a similar idea there, and its declined in a 3 wave move, so OK for a 4th wave pullback, as i don't have a breakdown confirmation i consider the market incomplete from the 26/27th Feb lows

We should still see a new high for a 5th wave in both the ES and DAX. Unless i see a breakdown under 1520ES, i still suspect this is a 4th wave in progress

The DAX would need a strong breakdown under 7830 to be a concern for the bulls





Thursday, November 29, 2012

Elliott Wave Analysis of the DAX



From the March 2009 lows we can clearly see that the market resembles a 3 wave advance, this is a key component to Elliotticians as it suggests the advance is a corrective move against the decline from 2007-2009.

If you look closer you can clearly see what looks like a wedge shape. I am currently working an idea on the SPX to see a new yearly high around 1480-1500SPX either into the year end or the start of next year.

Hence which I think the DAX is likely to drag other markets higher, you can also see the 3 wave decline from the September 2012 highs, this is a strong sign that the US markets likely made a corrective decline and this idea fits in with my long term ideas for the US markets as well, to run up and test the Sept 2012 highs around 1480 on the SPX.

Currently I think the DAX is working an ending diagonal and now in wave [5], so a target towards 7550-7600 is favored, which should see the SPX see that new high I want to see for its pattern.



The advance has been a strong move, but we still need to see some sort of 3 wave move, I suspect it start to get choppy as it enters 7400-7500 area, but overall I am looking for a new yearly high to complete the ending diagonal idea.

To non technicians you can see the bearish wedge shape, although on this scale it can still take a few more weeks to finish as it’s lacking a new price high.







So the bulls really need to stay focused on this idea as the market approaches my target band I strongly suggest caution for anyone still long this market, as if my interpretation is correct and we make a new price high, the expectation is for a strong reversal, one that could ultimately suggest this market is going back to test the Mar 2009 lows and target 3500.

Until next time 

Have a profitable week ahead