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A month ago I was rather optimistic about the DAX index for March, but, in the end, all gains were erased. My optimism is still there, but now I guess the structure of the waves suggests I have to be patient. Just as spring in Ottawa takes a long time, the snow has not completely disappeared and there is still ice on the river. I start with the analysis of the cycles. The Elliott Wave analysis will be next.

According to my monthly cycle count, the last quarterly cycle of the yearly cycle has started, and the last bar has been below the quarterly cycle bottom. This means we have to expect a bearish cycle, which is quite logical for the last cycle of a higher order cycle.

The quarterly cycle bottom is of course also a monthly cycle bottom.

There is one complete weekly cycle since the quarterly cycle bottom, the second weekly cycle is bearish and has 12 bars, so the next weekly cycle bottom could be in place in April or early May. Probably it will also be the midcycle low of the monthly cycle.

Possibly the DAX has just started the last daily cycle of the weekly cycle, and that implies a weekly cycle bottom within four weeks, but the last cycle is short, so there is room for doubt.

My conclusion from the cycle analysis is that we have to expect a cycle bottom within a few weeks, and probably that will be the monthly mid-cycle low.

Now I turn to the Elliott Wave analysis.

The monthly wave is counted as an impulse wave from March 2009, and it is nearing completion. Clearly, imho, the last wave is missing one more leg up. So, after the next weekly cycle bottom, I still expect a rally to a new all-time high.

The count of the last wave, [4] yellow, is quite complex. This is not unusual for a corrective wave. The structure seems to be an expanded flat, (w)-(x)-(y) red, where (y) is an impulse wave. The last part, the fifth wave of the impulse, seems to become an ending diagonal.

The conclusion from the EW analysis is in accordance with the cycle analysis, with the extra that EW expects a new all-time high this year. The fourth subwave of the diagonal has to be shorter than the second, which limits the upside, and the fifth sub-wave has to be shorter than the third, which puts a limit on the expected downside. Violation of these rules will invalidate the wave count.

In short, I expect a tough three or four weeks before the rally will take off. The same holds for spring here, now everything looks gross because of the melting snow.

That is all for now, trade safe, the next update is to be expected in a month.