Saturday, October 29, 2016 10:37:23 PM
Cracks in the DAX
Elliott wave technical analysis shows the German DAX is at a tipping point. There are two equally probable counts at this time; one bullish and one bearish.
=== The bullish count is labeled in red. ===
The high in the year 2015 is the end of Wave III of a longer wave that started from the 20008-9 lows.
For the rest of 2015 and into early 2016, Wave IV traced out a zig-zag or a possible flat.
Out of the 2016 lows Wave V has so far traced out an ending diagonal, as accentuated with converging blue lines. Presently Wave 5 of the ending diagonal is structurally complete; however, its duration is disproportionally shorter than Waves 1 and 3. While Wave 5 has pushed ever so slightly above the Wave 3 high, Wave 5 would look better if it advanced further to the upper trend line. Much of Wave 5’s time has been spent hugging the lower trend line. It’s as if Wave 5 doesn’t have the force to make it past the middle of the channel as Waves 1 and 3 did. Wave 5’s challenge of the upper trend line is questionable yet could last another 2 weeks winding its way to the 11000 area. Far more certain is Wave V truncation, terminating below the end of Wave III in 2015.
=== The bearish count is labeled in blue. ===
The high in the year 2015 is the end of Wave V.
For the rest of 2015 and into early 2016, Wave A traced out a zig-zag or a complex wave.
Out of the 2016 lows Wave B has so far traced out a triangle. The same comments that apply to the completeness of Wave 5 in the bullish count apply to Wave B in the Bearish count. Wave B is nearly complete, if not already.
=== How deep a sell off ===
Both wave counts convey large losses into next year.
The bullish count has an ending diagonal AND truncation, so the ensuing sell-off should be sharp to the Wave IV area, with a possibility of finding that initial support (Bear Wave 1) before the end of 2016.
The bearish count has a triangle followed by Wave C. The sell off should also find initial support at the end of Wave A, but take more time in doing so.
Financial events to expect may include, but are not limited to:
Deutsche Bank collapse
Italian bond collapse. Yields have shot up >50% on the 10 yr bond over the past 2 months, while breaking the 1 yr downtrend resistance.
Spanish bond collapse. Yields have shot up >50% on the 10 yr bond over the past month, while breaking the 1 yr downtrend resistance.
Greek debt default. GREXIT, GWAR (not the heavy metal band, but the collateralization of Greek debt by the EU sending in troops to Greece)
Financial war via import bans, as Germany wants to do to the UK in retaliation for BREXIT
Financial wars via taxing foreign companies, as US has done to Deutsche Bank after the EU did to Apple.
All the above lead to liquidity problems that result in prices of even gold and silver falling.
Elliott wave technical analysis shows the German DAX is at a tipping point. There are two equally probable counts at this time; one bullish and one bearish.
=== The bullish count is labeled in red. ===
The high in the year 2015 is the end of Wave III of a longer wave that started from the 20008-9 lows.
For the rest of 2015 and into early 2016, Wave IV traced out a zig-zag or a possible flat.
Out of the 2016 lows Wave V has so far traced out an ending diagonal, as accentuated with converging blue lines. Presently Wave 5 of the ending diagonal is structurally complete; however, its duration is disproportionally shorter than Waves 1 and 3. While Wave 5 has pushed ever so slightly above the Wave 3 high, Wave 5 would look better if it advanced further to the upper trend line. Much of Wave 5’s time has been spent hugging the lower trend line. It’s as if Wave 5 doesn’t have the force to make it past the middle of the channel as Waves 1 and 3 did. Wave 5’s challenge of the upper trend line is questionable yet could last another 2 weeks winding its way to the 11000 area. Far more certain is Wave V truncation, terminating below the end of Wave III in 2015.
=== The bearish count is labeled in blue. ===
The high in the year 2015 is the end of Wave V.
For the rest of 2015 and into early 2016, Wave A traced out a zig-zag or a complex wave.
Out of the 2016 lows Wave B has so far traced out a triangle. The same comments that apply to the completeness of Wave 5 in the bullish count apply to Wave B in the Bearish count. Wave B is nearly complete, if not already.
=== How deep a sell off ===
Both wave counts convey large losses into next year.
The bullish count has an ending diagonal AND truncation, so the ensuing sell-off should be sharp to the Wave IV area, with a possibility of finding that initial support (Bear Wave 1) before the end of 2016.
The bearish count has a triangle followed by Wave C. The sell off should also find initial support at the end of Wave A, but take more time in doing so.
Financial events to expect may include, but are not limited to:
Deutsche Bank collapse
Italian bond collapse. Yields have shot up >50% on the 10 yr bond over the past 2 months, while breaking the 1 yr downtrend resistance.
Spanish bond collapse. Yields have shot up >50% on the 10 yr bond over the past month, while breaking the 1 yr downtrend resistance.
Greek debt default. GREXIT, GWAR (not the heavy metal band, but the collateralization of Greek debt by the EU sending in troops to Greece)
Financial war via import bans, as Germany wants to do to the UK in retaliation for BREXIT
Financial wars via taxing foreign companies, as US has done to Deutsche Bank after the EU did to Apple.
All the above lead to liquidity problems that result in prices of even gold and silver falling.
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