Spring is in the air!

The scenario discussed in the two previous post is playing out as expected. By now the DAX index has reached the horizontal support zone:

DAX monthly

The monthly wave count is still incomplete, so there has to follow a wave up to a new all time high before a larger correction takes place (and even that may not be the most devastating one, but that case is less convincing, so I leave that discussion for the end of the expected fifth wave). Or, of course, the wave count may be false.

A few weeks ago I updated the previous post with this 180 min cycle chart of the DAX index:

DAX spot 180 min

I wrote that a break of the bearish flag to the upside would be a very bullish signal, but that break never actually happened, though the bulls really did their best. A look at the Elliott Wave count clearly shows why: a fifth wave down was missing.

DAX 180 min spot

It is hard to say whether the fifth wave is complete now, I think not, but if this wave count is correct there will be a bottom soon, after which either a rally to a new all time high will start, or we have to endure another couple of legs of this corrective wave.

So March 2018 started bearish, but chances are it ends very bullish.

Trade safe, greetings from Ottawa where spring is in the air!






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The first week of February was nothing less than spectacular, but I think: you ain’t seen nothing yet.

DAX Monthly

Price has arrived in the standard Elliott Wave target zone, i.e. the area of the lower order fourth wave. This means that one should expect the formation of a bottom and the start of a new leg up. According to my wave count, which of course can be wrong, no guarantees possible, this is only wave four of five. The power and the speed of the sell off though, may be an indication for what will come once wave five is complete!

DAX Weekly

There are two ways to count the weekly cycle. I prefer to count it as almost complete, consisting of 23 bars, but one can argue that the DAX is in the second weekly cycle since the last Monthly cycle bottom, in bar #10. In the last case it is conceivable that the sell off will continue until price reaches the 200 bar moving average around 10950.

DAX Daily

However, in the daily chart the wave down looks complete, and the structure from the November 2017 high is best interpreted as an expanded flat, a corrective wave, part or all of the expected wave four of five. Emphasis should be on “part” because there is no Elliott Wave rule that excludes extension of the correction.

DAX 15 min

Even under the microscope of the 15 min chart the wave down can be counted as a complete wave.

So, what to expect next?

There are two possibilities, imho. First, wave four is complete, then we will see a new motive wave to all-time highs. Second, the expanded flat is only the first sub-wave of wave four, and then there will probably be a sideways move for some time, and after a while the formation of a new low, and only thereafter a rally to a new all time high. Corrections have way more possibilities than motive waves, and are therefore very hard to predict.

Looking at the Monthly chart I guess it will be the first possibility because an extension of the correction will give wave five a rather unbalanced look. But that’s just a guess.

In the 15 min chart I have drawn a small flag from the  low, if it breaks to the upside I call it a False Flag  and I consider it to be a low risk buy signal.

Once wave five is complete I expect a really spectacular crash of the market that will dwarf everything we have seen since 1928. The financial system has become so instable by the low interest rates and the boundless creation of fiat money that a hard reset cannot be avoided anymore, IMHO of course, I’m a trained physicist, not an economist. The present situation reminds me of the well known Schopenhauer quote:


Trade safe, greetings from Ottawa, ON, Canada. I’m really enjoying a great winter here ;).

I’ll be writing again in about a month (or sooner, if anything interesting happens).

added Feb 10:

A nice summing up of the decline from another, non-technical, perspective by Mohammed El Erian:


And another blog I like to follow:


added Feb 14:

DAX spot 180 min

A break of the flag from the low to the upside would be a bullish signal, and a first confirmation of the analysis above.





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A Spectacular New Year

I wish you a very happy new year, I really expect it will be a spectacular year.

I have re-read all my posts of 2017, and I found it pretty boring stuff. The first months I was under the impression a sizeable selloff was possible, but the decisive level I identified for confirmation was not broken, and so the market went higher and higher without any surprises.

The monthly chart looks like the uptrend is not over yet:

DAX Monthly

The all-time high is counted as the end of wave 3 of 5, and if this wave count is correct we have to expect one more push up.

DAX Weekly

On a weekly basis, the corrective wave from the top looks unfinished, there should be at least a new low, and if there is some similarity to the corresponding second wave the low may be in the support area indicated in the chart.

One possibility is that the next weekly cycle bottom, which is due soon, will coincide with the end of the correction. At the moment the cycle has 17 bars.

DAX Daily

The daily cycle is the fifth since the last weekly cycle bottom in August 2017, and it has only 8 bars, so I do not expect the daily and weekly cycle bottom within the next two weeks. But I can be very wrong here since it has been hard to discern the daily cycles in the sideways move. So I will be looking for price action signals as soon as price has moved below 12800 (which in fact it did today …).

And why would 2018 possibly become spectacular? Well, maybe it will last until 2019, but the new monthly cycle will add 12 bars, so December 2018 will be bar 16. Keep in mind that a bearish cycle will often have left translation, so the top will be early, way before bar 16. Add to that the expectation of the fifth leg of wave 5 completing the wave that started in March 2009. Finally, consider we are living in the era of the everything bubble.

Speculating, the top may reach into the 14000’s, and the target down will be the lower level 4th wave, around 9000. So this will be considered a crash of 33%, and that is, IMHO, spectacular although predictable ;)

Once more, happy new year, and trade safe!

Greetings from Ottawa, ON, Canada.

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