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Long term bearish trend possible? – DAX outlook.



Right, It is not any doom scenario just plain option what can happen when situation do not improve. 

It is long term analyse of bearish trend formed on January 2018. And trying be completely objective here and open minded. Any targets here are come from technical analyse not as my sentiment is bearish or “believe” DAX go there such a thinks to decide I will leave to market only. 

As is daily chart before getting to mention targets DAX can rally many times but as long is creating lower highs and lower lows trend remain bearish. 


It is 2nd correction this year or more likely continuation of sell off started at January, DAX since then did not invalidate it by setting new highs. 

If we measure that movements using Fibonacci tools we can find :

Between January 24th and Feb 09 DAX sell off towards 38.2 of Bullish trend started in January 2016, next 2 months bounce and retest that lows on few occasions. Break thru get blocked and price rally back to 13200+.

That rally not only din’t clear room but also confirm forming down trend and reacted to Fib levels what show on measurements (doted lines) of last sell off, each time going lower and reacting to 23.6, 38.2, 50 etc. 


Conclusion:

Most likly price will reach again 11730 and once more retest 38.2 retrace but this time chances for breach are much higher.

Why? Last sell off was ninja style, started over night and was very aggressive and fast, market take by surprise but fight back to rescue trapped positions. Thanks to rally every institution cough there had time to adjust and cover, right now it may be not as much willingness to hold that support.


Targets:

We are close to Feb-Apr support 11730 – retest high likly

Breach – price drop towards next Fib level 50 at 11100 ish which also is bottom trend line of that forming channel – good chance for price to reach that level

Last man standing – That will be 61.8 retrace at 10.6k and target extension 161.8 of Jan-Feb at 10.5k – interesting target as both Fib measurements point same zone. 


Invalidation:

New All time high will sort that out, chances: quite small as there is just worst and worst situation on global markets and usually stronger for DAX months October – December can be just not enough to shift that tide. 

  • Trade wars
  • Emerging markets 
  • Poor economy conditions in Italy and Spain and EU general
  • Right movement parties getting stronger what we see in EU cuntries and they are EU  euro-sceptic
  • Brexit
  • Trump throwing bombshells against old oreder almost daily 

Until something real good not happens we will see just short time relief rally’s, to reload and sell lower.

If you real think – no! is not possible, well have look for price action in 2015 August to early 2016 – 4k decline, DAX can sell like that and there is almost nothing to stop it.


Do not worry about Germany, DAX is benchmark of stocks, stocks price are calculated from few to dozen times company performance, even slash 50% will not make any of them bankrupt just bring value closer to base. 

DAX can get back to 10k levels and no one will get harm with exception of wealth distribution amongst investors but that is price which we have to pay for speculations. 

Also such discounts are required in longer market cycles and are welcome by long term traders such like pension funds, market trading on highs all time is not entry point but profit take zone for them.

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