Elliott Wave update on German Dax Index: Aug 2012

From an Elliott Wave point of view, the recovery in the Gernam Dax index from its June 5, 2012 low of 5914 does not look like a third wave. In addition, the prior recovery from the September 2011 low of 4965 to 7194 looks like a three wave movement, followed by an overlap. Thus, while we should acknowledge the possibility of the index making one more significant recovery before a more serious decline in the big picture, the near term also warns of an impending completion of a minor diagonal. This is not to say you should run out today and short the DAX. Just be aware that as we witness a slow down in momentum in the ‘e’ wave of the diagonal, we should get ready for a correction. The attached chart of the German Dax shows my Elliott Wave counts in detail.

Elliott Wave count of German Dax Index
Elliott Wave count of German Dax Index

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  1. Triangles can also be X waves or occur at the end of a larger triangle. In short there is near term downside risk and then we take it from there

    1. Hi Learning, There are certain times when we are challenged. WIth JPM and HD, it looks like that. BUt if you consider the numerous other calls that worked very well, (eg Apple, BHP, HPQ, CAT, MCD etc) you will agree that Elliott Waves is a worthwhile tool to master.

  2. Dear Mr. Ramakrishnan,

    1) Would it be OK to label the wave X in the DAX chart as a wave 1, and the retracement as a wave 2? The X-A count as well as a 1-2 count would give similar trading decisions, but since this pattern is quite often seen elsewhere as well, I want to learn the general principle behind your choosing to use the X-A count over the 1-2 count…

    2) Are diagonals common as a wave 2 – or should we look for a diagonal in wave B of 2?

    Thanks and best regards,

    1. HI elliottwavelearner, one of the first things I tell those who attend my seminars and workshops is to feel free to count waves as they like. There is no right or wrong count, PROVIDED THEY FOLLOW THE RULES & GUIDELINES of the EWP. So I won’t judge what you have said is correct or wrong. You can determine that yourself by applying the rules and guidelines. If you need to learn those (or revise them again) I recommend a good book. FWTFF is a low-cost edition and many seem to like that. But feel free to get any standard text! Good luck.

  3. Hi ramki, little confused with yr longer term picture on DAX. If since octomb 2011 low is an abc up why then down move since early summer is not impulsive and it’s just an x which will probably lead to another abc up to new highs? Shouldn’t be trending down by now?

    Many tnx in advance

    1. Hi George, Thank you for that very interesting question. My approach to the markets is never to be bogged down by a particular wave count. Our goal is to profit from the market, taking the least risk possible. WIth that in mind, although I spell out a long term wave count as a frame of reference, I tend to focus on catching the next directional trade. Most wave counts will be proved wrong, even if it is done by an experienced analyst. So keep that bog picture at the back of your mind, but don’t spend too much time worrying about it.

  4. Have we now seen the last Impuls of Wave e to the boundary of the expanding triangle? In 1h Chart we can count a perfect 5 Wave move. But is this the end? The last Wave from 6000 to 7400 does not look very impulsive. I took a small short at 7400 near the 61,8% level of last Impuls Wave 5 ( Start Wave 1 was 6892,5 to End Wave 3 7250). How do you count it?
    Thanks for your great work

  5. I have read this book a few times now and all i can say is that this book is great! I still use this as a manual almost every time there is a problem regarding my analysis. However I was wondering if there would more books by the author to come? At least for those who read FWTFF and want to get deeper in Ramki style EWP.

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