Recent index trajectory 10,050 down to 8800, back to 10,000, down to 9700, dizzy! Very difficult index to trade lately, most traders are missing daily direction with index changing courses in a disgusting manner, very difficult to forecast, follow, or trade in last three months.
^GDAXI has always exhibit lots of volatility, multinationals with strong competition for the 30 issues in the index, very strong daily moves. Looking at a three year chart we see a very similar pattern of rising steady with wedged dips all along the strong upward trajectory. One difference from the American cousin, high correlation with DOW 30 & $SPX, would be that last two dips were near 10%, almost correction territory.
Zooming down to a year, we note index elliptical footprint, unlike most European indexes $DAX moves in elliptical fashion up and down with very fast turns pointed by sharp edges at tops and 'V' bottoms that recoil back strong and fast.
Since 2012, we have followed this index closely, it has moves of 900 points straight up, an exciting index to trade at all times. Appear to be an established top or barrier above 10,050 with index reaching area 3 times in 6 months and returning fast to lower territory.
Index Linear Regression Analysis indicates a downtrend cycle presently, below Regression Line, started at 9644 on 7/25/14 and index has come up to Regression Line twice since, both times with strong down drops. We are projecting 'lower next' with TARGETS,
9749 ----------> 9598 floor.
A drop to 9170's area is possible under present chart pattern conditions, index at times projects specific, bullish or bearish formations, and follow up normally respond to repetition of prior patterns. If drop now, this would be our third drop in cycle, $DAX works in 3's, fall expectancy is reinforced by this fact.
Trend continuation for opening on Monday will be DOWN,
Index is highly correlated to DOW 30 in US, I have traded this index with a live Dow chart next to $DAX, and was very successful, tic for tic moves, with Dow acting always as leader.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.