DAX extend the rally today and broke to a new high above blue (3). Index has reached 2.618 – 3.236 extension area where black wave ((iii)) can complete and we can see a pull back in black wave ((iv)) followed by more upside towards 11866 – 11951 area to complete red wave 3. We can see that DAX has broken above the parallel channel on the chart which is a confirmation that DAX rally is unfolding as an impulse and we are still in wave 3. As per the wave theory, once red wave 3 is complete, we can expect a pull back in red wave 4 to correct the cycle from red wave 2 low and another leg higher to complete wave 5 wave Impulse from blue wave (4) low.
Wave 3 should extend to at least 1.618 extension of wave 1, this level comes at 11866 with 200% extension of wave 1 coming at 11951, as 1.618 extension at 11866 has not yet been reached and RSI is not showing any divergence, we should still be in wave 3 and see another high after a pull back to complete wave 3. Black wave ((iv)) pull back should ideally hold the broken parallel channel line.
DAX 1 Hour Chart
5 Wave Impulse
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