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.