Dax and Dow Jones: Can the rally continue?

Germany’s leading index, the Dax 30, has managed to put itself in a better light – supported by Wall Street indices such as the Dow Jones. The power of the 0.50 resistance at 10,673 points on the Dax was probably simply too great for that. On the other hand, no usable signal for an imminent trend reversal could be generated. The break of the small 0.24 support (10.450 points) is a first warning level in this regard. More should not be interpreted into this step. We have left our scenario unchanged due to the missing signal level.

Outlook:

With the formation of the small lethargic range, the Dax Wave (5) could not yet complete in accordance with the rules. Only a closing price below the 0.62 support line (currently 9.877 points) would cause this move. However, the multiple touchdown on the 0.38 support line at 10,227 points indicates a further rise. Of course, not much can be expected from this move. As the chart shows, we expect a maximum rise to the 0.62 support line at 11.339 points.

Der Dax mit nur noch begrenztem Aufwärtspotential

A 0.62 retracement is usually a very powerful resistance line, so apart from a slight overshooting of this resistance, a significantly higher rise cannot be expected. After the completion of (A), the subsequent (B) will put the Dax back under significant pressure. We can only determine the goal of this correction after the completion of (A). However, the range around 9,000 points should already be targeted. We cannot currently see any major adversity.

Conclusion:

Currently, the Dax continues the recovery that started in March. Nevertheless, we do not see any chance to join the index at the moment. As a hedge, the 0.62 retracement at the current 9.877 level should be used.

The prospects for the Dow Jones – better than for the Dax?

The Dow Jones has used the past two weeks to take a short breather. The small correction that occurred during this period could not lead to a trend-setting decision. The index is still in the rally that has been underway since March, or better said, in its first phase (A). It is therefore clear that the Dow Jones (similar to the Dax) is undergoing an overall correction. Only the very large view allows us to expect better advances again.

Outlook:

Currently, wave (c) of the abc formation is forming. In the course of this wave, a wave completion formation must form. With the small correction of the last few days, the first sub-wave of this formation has therefore been formed. In the further course of (c), the index may still rise to the 0.62 line at 24,572 points. Even a slight overshoot is, as always, within the realm of possibility. The maximum target of (A) is formed by the resistance at 26.373 points (0.76 retracement).

Der Dow Jones hat sich besser entwickelt als der Dax

We give this option, this increase, almost no chance of being implemented. Rather, after the completion of (c) and the associated correction from (A) to the 0.62 retracement, a correction (B) will occur. As the chart shows, (B) could well drop to the 0.76 support at 21.587. There is even more potential on this side if one follows the rules. Nevertheless, we expect a rather moderate sell-off, as shown.

Conclusion:

Even though the chart could give a different picture, the Dow Jones remains in correction mode. At the moment, the conclusion of the small trend is on the agenda. Therefore, we advise against a positioning. As a hedge, the 0.50 retracement at 22.583 points should be used.

Dax und Dow Jones im Vergleich
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