German DAX futures are in bullish move since start of September, showing an impulsive price action. Impulse is a five wave pattern so we expect more upside as current decline from the highs appears to be a fourth wave, a temporary contra-trend movement. For now, we don’t see a completed pull-back yet, but market could find a support around 8510-8570 region where we see an open gap. Those gaps could react as a reversal, in our case as a support in wave 4 for a reversal up into wave 5. Targets for wave 5 are around 8860 where we see a 200% extension of a previous decline from 0845 to 8090 in August.
Basically those fourth waves are pull-backs that could represent an opportunity to join the larger trend. However, if you are looking for any set-ups after wave four retracement its important to know some rules of the Elliott Wave principle. One of the most important rule is that wave 4 must never retrace back to the area of a wave 1. In our case this comes in at 8279, so as long market is above this level bullish view remains valid.
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