As analyzed sometimes before, I am expecting the German Index to be in a bigger consolidative wave 4 which I am expecting to play out as a "abcde" triangle. Within this triangle wie can observe 3 wave moves "abc". I am expecting the DAX to have finished an "a" and "b" wave and a "c" wave could now be about to start which should bring us lower. Therefore I am seeing here a very good risk to reward situation at the moment. However the setup becomes invalidated of course should the German Market Index rise above the indicated stop level. Fundamentally Germanys Economy is heading into a recession, PMIs have been worsening for over one year, with a record low just some weeks ago, well in the contracting territory with a read of 41.7. The car manufacturing sector is dying due to the trade war and over regulation within Germany take a look at my Daimler Analysis linked at the bottom. All in all technically and fundamentally I don't see the German Index rising over the next months, all tough it has been kept up strong for quiet a while now despite bad economic data. The ECB has started a new QE program to combat the economical deterioration, much of this has been priced in now maybe its even overpriced because keep in mind that this program will not start until November and typically monetary policy needs around 8 Months to show its first effects, so at the moment there is no reason to assume the economy will get better within the next months already. We also don't know how well the QE will work around this time we need to wait at least until half a year from now to get fundamental readings. Should we see a recovery in the PMIs about half a year from now or more and should the DAX be on low levels a this time around then this would be a long signal as we could observe that the monetary policy is kicking in, however I think at the moment its definitely too early for that and too much optimism has been blindly priced in relying heavily on the ECB.
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