User: TWT: LONG TERM EWP: DAX Index : Follow Up of the Long-Term EWP | The wave trading

On January 8 I reviewed the long-term EWP suggesting that the DAX was unfolding the same pattern like SPX, which calls for a Double Zig Zag from the 2000 top. If this count were correct then from the March 2009 low price would be involved in the later stages of the wave (X). Below is the chart I posted in the update:

However there are two issues that may invalidate this count:

In a Double ZZ It is odd for a wave (W) to bottom at a much higher price than the low of the preceding wave (A). Probably the down leg off the July 2007 is not impulsive therefore it is a questionable wave (W).

If this were the case how can we solve the labelling of the pattern?

At the moment I can only say that if from the March 2000 the sequence of higher lows/lower highs were maintained then price could be unfolding a Triangle instead of a Double ZZ. This idea will be invalidated if the current up leg breaches the July´s peak at 8151.57

Lets move now to the pattern off the March 2009 low.

In my opinion price is unfolding a 3-up leg structure but it cannot be classified as a Zig Zag, since the internal structure of the second up leg (From the September 2011 low is not impulsive, hence it cannot be a wave (C).

So far we have a 7 –legged structure therefore EW wise we should not rule out an 11-wave structure. For this reason I maintain the scenario that price from the March 2009 low is unfolding a Double Zig Zag or a Triple ZZ, with the (W) established at the July 2007 peak, the wave (X) at September 2011 low, hence now price is involved in either unfolding the wave (Y) or the wave (Z).

A 7-wave up leg can be classified as a wave (Y) but again the lack of impulsive internal structure disables a Zig Zag unless price is unfolding an Ending Diagonal wave (C). This is the scenario I suggested on January 8

But as you can see in the DAX weekly chart below with the required overlap below the peak of the wave (I) the pattern would not be converging, instead it would look like a channel. And in addition if the retracement of the up leg off the November lows is larger then this pattern would be definitely be invalidated:

So the pattern in order to be consistent with EW rules should be unfolding an 11-legged structure, which would imply a Triple Zig Zag. If this is the case and since neither the up leg from the November low is impulsive so far I have to guess that price should unfold an Ending Diagonal with the wave (I) completed at the January´s peak.

In order to increase the confidence of this pattern price will have to unfold a corrective pullback probably towards the 0.618 retracement.

For the short-term time from I expect more weakness ahead (keep in mind that the US equity market should begin its own corrective phase).

I will monitor how the current pullback evolves in order to solve this complictaed wave structure