DAX Technical Analysis 2011.10.18

Looking for a zig-zag down correction

Yesterday’s price action of DAX index broke the most recent trend line and declined sharply toward the 5,750 area.

This down move is likely to continue after a correction (up move) that we are witnessing right now. The main support/target zone remains in the 5,500-5,700 area, set by the 38.2% and 61.8% retracement levels of the previous rally.

If the actual resistance zone (5,880) will manage to attract enough sellers, a more accurate target for the down move will be in the 5,600-5,660 zone. There are the late September highs in this area and the 50% retracement level. The 3 waves down move pattern (zig-zag) scenario keeps its relevance up to this point.

A closer look to the most recent price action (last 24 hours) reveals a resistance zone in the 5,880-5,955 area, set by the 38,2% and 61.8% retracement of yesterday’s decline.

Depending on the reversal level that will probably occur in the next hours, we can establish a down target in the 5,600 zone. However, if the buyers will prove strong enough to break through the up mentioned resistance zone, the next resistance is at the previous high, at 6,080 level.  

DAX Technical Analysis 2011.10.17

DAX Index is loosing momentum

DAX Index gained around 950 points (18.6%) from the 4^th of October until now, the most power being in the first third of the move.

The rally is clearly losing momentum as the multiple trend lines (connecting previous troughs) are showing a decreasing slope. In other words, sellers are becoming more visible and buyers are losing optimism.

If the 6,000 – 6,100 will turn out to be the top of the rally, we are expecting at least a down correction, targeting the 5,500 – 5,700 area. Most probable, the down move will be formed of 3 sub waves (as shown on the chart), creating a break-retest-continuation pattern.

    

EUR-USD Technical Anlalysis 2011.10.17

This is a pretty clear Elliott Wave count

As expected last week, the Euro climbed against the Dollar, breaking into the resistance zone 1.3850-1.4000. This is a strong resistance area as it represents the 50%-61.8% retracement of the September down move.

The Elliott wave count points out a 5^th wave in progression that eventually will be followed by a 3 wave correction (down move in this case). The T1 trend line (connecting 2 and 4 troughs) is the dynamic support of this rally and a break of it will signal the correction.

Wave 3 is extended, composed of 5 clear sub-waves, which sets a possible target of the 5^th wave in the 1.3910 zone (wave 5 = wave 1).   

On the shorter time frame (15min), the rally from early October has developed in 5 waves, the 3^rd being extended and the 5^th being in progress. Analyzing the 5^th wave, we can identify four waves already formed and the fifth (wave (v)) still developing.

The most probable outcome is a 3 wave down move (correction) as soon as wave (v) and 5 will be ended. However, the top of the move cannot be exactly identified, 1.3910 level being a good resistance zone. A larger resistance zone is ending at 1.4000 level.   

EUR-USD Technical Anlalysis 2011.10.12

The Euro has rallied along with the stocks for the past week, breaking up the falling wedge pattern and aiming for the 1.3850-1.4000 resistance zone.

The retracement levels are measured for the month of September decline and, the previous main resistance was established by the 38.2% retracement.

The up-coming main resistance zone is set by the 50-61.8% area where the price may encounter strong bearish resistance.

Crude Oil (WTI) Technical Analysis 2011.10.11

Crude Oil is breaking down the channel

The Crude Oil prices rallied in the past week (including yesterday) in a bullish channel that now seems to be breaking.

This perfect up move in the channel, having no failures, is how an impulse wave should look like and a probable down move in the next hours will have a corrective function. The target is the $79.50-81.90 area and reversal signs at these prices may offer highly rewarding long position opportunities.

Crude Oil (WTI) Technical Analysis 2011.10.10

Crude Oil is oscillating in the main resistance zone

Crude Oil followed a bullish channel in the past few days in what seems to be a longer bullish move.

The T1 trend line was broke and has not been properly retested, signaling the power of the buyers. The prices are currently evolving in the main resistance zone and the upper border ($85.00 level) is a very strong level that has been tested along the previous months.

A break below the lower limit of the channel would set the market towards a further decline, targeting the $79.60 level. An intermediary support is set  at the $81.35 level. 

DAX Technical Analysis 2011.10.10

Rally is losing power

On the intraday chart (15min) of DAX we can spot a few signals of weakness in the up move we have witnessed last week:

1. T1 trend line was broken and retested - this price pattern is often formed at local tops/bottoms.
2. 5,750 resistance level was tested twice and the sellers overcame the buyers. The rally seems to lose its power.
3. Bearish divergence on RSI that usually forms at the end of an up-swing.   

In case of a further down move, the target zone is set between the 38.2 and 50% retracement (5,440-5,510).

On the 4 hour chart (below) DAX index has clearly formed a strong base that can lead to a longer rally in the next weeks. The main target for this possible rally is the 50% retracement area in the 6,340 zone. According to Elliott Wave theory, wave 2 (which is in progress) will develop in three ([a]-[b]-[c]) sub-waves.