- German DAX (DE30 on xStation5) reached 13500 points, the likelihood of a pullback increased
- Could the price go toward 13620 points before a correction occurs?
- A possible head and shoulders pattern seen in the intraday time frame
The German stock market registered another excellent performance last week buoyed by the weaker euro, fresh records on Wall Street. As a result, the DE30 struck its new all-time high at 13500 points, however it seems that cautiousness might be warranted at this stage as the probability of a deeper pullback (ca. 10%) is rising.
The weekly interval sees that the price already realized our scenario sketched out over the course of the last weeks (13500 points) which could coincide with the end of a 5th wave. There has been no a confirmation of a bearish market thus far therefore it’s worth paying attention to other technical indicators. That said, RSI signals that we’ve already entered an overbought zone and a divergence with the price might be spotted.
The DE30 from the Elliot wave theory’s point of view. Source: xStation5
The price drew an ominous candlestick on Friday in the vicinity of 13500 points, however it failed to touch an upper limit of a channel. Even as a test of the mentioned boundary isn’t necessary to commence a pullback, nevertheless once buyers push higher they may run into a more noteworthy resistance nearby 13620 points which along with an upper limit could constitute a decent support for sellers. Do notice that RSI illustrates an overbought area as well.
The DE30 is approaching important obstacles. Source: xStation5
At this time frame one may notice that RSI is hovering around 70 points, a barrier which means possible overbought. Once the oscillator comes below this level, it would be the first bearish signal. Having said that, there would be still some place to yet another small bullish wave.
The H4 interval suggests that a minor bullish wave could come up. Source: xStation5
Taking a look at the intraday time frame some interesting signals can be spotted. Firstly the price may be forming a possible head and shoulders pattern boding the end of the ongoing upward move. On the flip side it could also be just a corrective movement which may reach either 84 or 160 points.
Is it just a pullback or a durable shift of the ongoing trend? Source: xStation5