dax daily outlook for wed 05 aug potential bearish countertrend movement below 1148011545 resistance

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Key elements

• Since the low of 11028 printed on 28 July 2015 @1am, the German 30 Index (proxy for the DAX) has evolved within an ascending channel (in brown). Current price action is now coming close to the upper boundary (resistance) of the ascending channel at 11545.
• The hourly Stochastic oscillator is coming close to its extreme overbought level which suggests a possible pull-back in price action of the Index.
• Based on the Elliot Wave Principal, the index appears to have competed the bullish impulsive wave iii at 11480 which is the typical 3^rd wave target of 1.618 Fibonacci projection from 28 July 2015 low @1am to 30 July 2015 low @9pm. At this juncture, there is a high probability that the Index may shape a corrective bearish pull-back (wave iv) within a bullish impulsive 5-wave structure.
• The lower boundary (support) of the ascending channel stands at around 11350 which also confluences with the 38.2% Fibonacci retracement of the up move from 30 July 2015 low @9pm to the 04 August 2015 high @5pm  (a typical bearish corrective wave iv target based on the Elliot Wave Principle).

Key levels

Intermediate resistance: 11480

Pivot (key resistance): 11545

Support: 11380/11350

Next resistance: 11625 & 11790

Conclusion

Short-term technical elements suggest limited upside potential at this juncture for the Index. As long as the key short-term resistance zone at 11480/11545 is not surpassed, the Index is likely to shape a potential decline to test the 11380/11350 support within a medium term (multi-week) bullish trend.

On the contrary, a break above the 11545 pivotal resistance is likely to propel the Index higher to target the next resistance at 11625 before the 20 July 2015 swing high at 11790.

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