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German DAX (FDAX is DAX future) has a very secured longterm history delivering an important course high at the begining of the summer months and only to plunge thereafter ALWAYS!!! into a bumpy September-October:
This year the DAX/FDAX summer correction cycle was a very mild one in terms of time and price. This is bloody bullish outcome, so fresh index highs will soon be on the agenda once the dangerous window of end-September/early-October has passed.
In fact, we have to go back to 2017 where we could record a similar positive summer.
Then 2017 printed a flawless bullish uptrend year, cementing its final year low near open and the absolute annual top near close of 2017. Well, such a textbook uptrend year pattern will also be the case for actual 2021.
=> so expect the weekly pullback & daily downtrend which started on August 13th at the 16024 pts annual FDAX high at to continue quite choppy until the end of September. And then it will be very exciting at the 15300 points decision mark!
In today`s biggest picture the monthly chart reveals that the DAX/FDAX bull market respects a more or less perfect rising Parallel Channel which originates from the two extremes of the global financial crisis (2007-Top/2009-Low).
The # 1 // March 2020 coronavirus panic low was a deep but in the end positive violatation of the dark-green Parallel Channel support which then was successfully defended on a monthly closing base.
The new bull market cycle starting at # 1 // March 2020 Low was strongh enough to attack the 2 red rising Parallel Channel resistances again. The first time this happened was at the highs of the April 2021 candle. There, the lower of the two rising former alltime-high (ATH) rail resistances was approached for the first time. The following May 2021 succeeded in closing above the lower rising former ATH rail what was a small buy signal on monthly base.
After that, June, July and August candles were able to close above the lower former ATH resistance line, but found monthly closing base and monthly high base resistance at the upper former ATH resistance rail. Also the current September 2021 candle is braked by the higher resistance rail on a monthly high base but also on a monthly opening base. And watch: this month low is at that lower former ATH support rail!
==> FDAX has now been trapped since May 2021 between the rising upper former ATH resistance line and the rising lower former ATH rail, which we now have to classify as pretty good support on a monthly closing basis.
OR/ADDITIONALLY: ==> Since May, the trend has been upwards in a very narrow range. From above, the FDAX is limited by its still holding rising ATH line. From below since summer supports a rail that has already been confirmed four times in succession.
These two rising ATH rails are ultimately responsible for the fact that since around the end of April the upward trend has been very slow and sluggish, but at the same time there are no longer any deeper pullbacks.
With the additional help of the classic monthly 5 Fib number candle up setup anchored at the # 1 // 2020 March Low, we realize that of all things, the April 2021 highs achieved the natural & very important bull market upward target of the lower line of 1st double arc for the first time and since then it has apparently been the case that the market has resolved to fight painfully slowly, but only bullishly, through the natural resistance area of the 1st double arc.
Precisely because of these 2 conditions: On the one hand, since May sandwiched between two important narrow ATH rails and secondly additionally trapped since May between the two lines of the 1st double arc, we are once again experiencing the mass phenomenon what is: „Sell in May and go away, but dont forget to come back in September“!
As already mentioned at the beginning of today`s analysis, the May to September hibernation period, which has always been rather tough, has not turned out quite as bearish this year as has been the case far too often in the last 33 years, because FDAX has been crawling upwards in a narrow rising Parallel Channel formation since May. On the monthly chart ...:
... but also - and this very well-confirmed - simultaneously on the daily chart.
For this observe the above technical chart of the FDAX.
It shows that the Biden elect rally, what started in early November 2020, topped out late-April 2021 and it was precisely at this late-April high that the rising Parallel Channel picture created above began, which has since shown 12-13 confirmations at its rising resistance rail. Among others at the alltime-high of August 13 and most recently at the August 31 high.
Since the start of May the rising Channel resistance is a combined yearly and monthly and daily resistance rail cause this rail is in full harmony with the above explained monthly upper line of 1st double arc and the rising upper ATH resistance line!
==> This is mega-hard resisatance magnet a hard nut to crack, of course! A powerful bearish nut that will probably not be ready for final overcoming until around the end of October.
Ok, price is poised to test back the rising Channel support again, what would be the third to fourth confirmation of this combined daily, monthly & yearly support magnet! For this first watch the bearish momentum what looks to go steadily lower until end-September to early-October time period.
Second, market is in stronger daily downtrend, showing a lower highs and lower low series since August 13 ATH! Third reason why the Parallel Channel support must be revisited very soon with unusual high safety is that the September/October month change date simply is a MAJOR time magnet what the market has respected over and over again since it`s birth 33 years ago and this obvious TIME MAGNET should now force the FDAX downwards into MAJOR 15300 pts support magnet!
And my forecast is that the FDAX even has to test its Channel support around October 1st MAJOR TIME MAGNET shy below the 15300 pts!
And it would not be a coincidence at all if the range of the MAJOR TIME MAGNET of the very first May 2021 trading day, what is May 3rd, has to be reached around the turn of the month together with 15300 pts Channel support and monthly GUNNER24 Double Arc main support what for the entire month of October 2021 also exactly runs at the 15300!
This third of May 2021 trading range spanns as follows:
Open at 15188 pts
High at 15280 pts
Low at 15116 pts
Close at 15236 pts
My best guess is: a late-September to early-October cycle low violates big 15300 pts support magnet by little and dips to a 15280-15236 pts or so to kick the weaker bulls, followed by a rally what will print highest highs of the year towards end of December 2021!
Be prepared!
Eduard Altmann
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