dax daily outlook thurs 22 oct low conviction for last push up scenario towards 1032010380 163539201

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX) has rallied as expected almost hit the lower limit of our expected upside target of 10320 (printed a high of 10278, missed by 0.4%) in the late European session.

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

Key elements

• The Index is now coming close to the key medium-term resistance at 10380 which confluences with the neckline of the impending bullish “Double Bottom”, the upper boundary of short-term ascending channel (in dark blue), the upper boundary of the longer-term ascending channel from the 29 September 2015 low (in orange as depicted on the hourly chart) and the 5^th wave target of 1.00 time of the length of wave 1 projected from the low of wave 4 (9888) seen on 14 October 2015 @3pm based on the Elliot Wave Principal.
• The more sensitive momentum oscillator, the daily (medium-term) Stochastic has flashed a bearish divergence signal at its extreme overbought level. This observation rises a “red flag” that the upside momentum of the uptrend in place since 29 September 2015 low is losing strength and a deeper pull-back/consolidation in price action is round the corner.
• The intermediate support is at 101740 which is defined by the lower boundary of the short-term ascending channel (in dark blue) and the 23.6% Fibonacci retracement of the recent up move from 15 October 2015 low @2am to yesterday, 21 October 2015 high of 10278.
• In conjunction, the hourly (short-term) RSI oscillator is still hovering above its trendline support and the 50% neutrality level.

Key levels (1 to 3 days)

Pivot (key support): 10170

Resistance: 10320/10380

Next support: 9890

Conclusion

Longer-term technical elements have started to show signs of deterioration on the upside. Even though, the Index is being supported by an intermediate level at 10170, the conviction is low for the “last push up” scenario to target the significant resistance at 10320/10380.

On the other hand, a break below the tightened daily (short-term) pivotal support at 10170 is likely to trigger a deeper pull-back towards the next support at 9890.

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