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DAX Gains Will Slow Down in Start Of 2011

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Dec 27 2010

Traders who are positioned Long on DAX or any other major indices, may look to start booking profits, as index is trading in a wave (5) and approaching its 7140-7180 target/resistance zone. This its a final sub-wave of a five wave rally shown from 5327 August 2010 lows, so any gains will likely slow down very soon, which is also confirmed by a bearish divergence on the RSI which shows that bulls are already loosing strength. In Elliott wave theory a turning point, at least corrective follows after every five wave rally. In fact, we anticipate some more important, larger turning point in 2011 from the highs, since we believe that gains from August 2010 is a wave C rally, part of a corrective structure that started already in March 2009.

With this being said, investors should look for safe investments such as Japanese yen and US dollar, a currency that should get even stronger against the weakest performer in 2010, the Eur!

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DAX daily chart: