dax daily outlook fri 13 nov approaching key inflection zone of 1065010520 for a potential short ter

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX) has tumbled right below the key short-term 10930/10993 resistance zone as expected and almost hit the upper limit of our downside target at 10700 (printed a low of 10704 earlier this morning, 13 November).

Please click on this link for a recap on our previous daily outlook/strategy.

Key elements

• Current price action of the Index is coming close to a short-term key inflection level of 10650 which is defined by a Fibonacci cluster (1.00 projection from 06 November 2015 high to 10 November 2015 low @6pm projected from 11 November 2015 low @9pm + 23.6% retracement from 29 September 2015 low to 06 November 2015 high).
• The next key support lies at 10520 which is the upper limit of the pull-back support of the “Double Bottom” bullish breakout (see daily chart).
• In conjunction, the daily (medium-term) RSI oscillator is coming close to its critical supports which suggest that the downside momentum of the current down move is likely coming close to an “overextended” point where a snap-back in price action of the Index may occur soon.
• The near-term resistance is at the 10870/10910 zone which is defined by a trendline resistance (in pink) linking the lower highs since 06 November 2015 and the 50%/61.8% Fibonacci retracement of the current down move from 06 November 2015 high to the current low of 13 November 2015.
• The hourly (short-term) Stochastic oscillator still has a bit of room left for further potential downside before reaching its extreme oversold level.

Key levels (1 to 3 days)

Intermediate support: 10650

Pivot (key support): 10520

Resistance: 10870/10910

Next support: 10380

Conclusion

The Index is now approaching a short-term key inflection zone at 10650/10520 and as long as the 10520 daily pivotal support holds, it is likely to shape a potential short-term rebound to target the intermediate resistance zone of 10870/10910.

On the other hand, a failure to hold above the 10520 pivotal support may see the bears regain its foothold for a direct decline towards the next support at 10380.

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