DAX - Short-term exhaustion expected near 13,029.
The German DAX posted a new all-time high yesterday at 12,976. This is in line with the expectation of a final rally closer to the resistance cluster-area between 13,424 - 13,435.
Short-term, the rally from 12,044 looks stretch and is expected to run into a temperary to near 13,029 in wave iii for a correction in wave iv towards 12,797 and the a final impulsive rally into the 13,424 - 13,435 area to complete the impulsive rally, not only, from the February 2016 low at 8,695, but also from the March 2009 low at 3,589.
Once this impulsive rally is complete a larger corrective decline should be expected, but for now, we need to stay focused towards the upside and the important 13,424 - 13,435 area.
I would like to add one word of caution. We are in the final stages of the rally from for March 2009 and once the top is in place a larger correction towards at least 8,700 should be expected. This means that from the current level of 12,955 a potential profit of close to 4% is available, but the potential downside risk is close to 33% or almost a 10 to 1 risk/reward.
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