dax weekly outlook 16 nov to 20 nov right above 1049010380 key support to see the start of another p

(Click to enlarge charts)

What happened last week

The German 30 Index (proxy for the DAX) did not shape the intended “last push up” towards 11220 and tumbled directly towards our expected downside target at 10520 (printed a low of 10489 in this morning Asian session, 16 November 2015).

Please click on this link for a review on our prior weekly outlook/strategy.

Key Economic Data Release/Events

• 16 Nov (Mon) – ECB President Draghi’s Speech @1015GMT
• 17 Nov (Tues) – Germany & Eurozone ZEW Economic Sentiment Survey for Nov @1000GMT
• 19 Nov (Thurs) – ECB Monetary Meeting Accounts @1230GMT
• 20 Nov (Fri) – ECB President Draghi’s Speech @0800GMT

Key elements

• The current decline of 5% from 09 November 2015 high of 11051 has reached/close to a key medium-term support zone of 10490/10380.
• The aforementioned key support zone of 10490/10380 is defined by multiple confluence factors; the pull-back support area of the “Double Bottom” bullish breakout, the trendlline support (in dark blue) that is linking the higher lows since 29 September 2015 and the 38.2% Fibonacci retracement of the up move from 29 September 2015 low and the 09 November 2015 high (see daily & 4 hour charts).
• In conjunction, the daily (medium-term) RSI oscillator is also resting now at its supports with the 4 hour (short-term) Stochastic oscillator that has flashed a bullish divergence signal and exited from its oversold region. These observations suggest that upside momentum has resurfaced (see daily & 4 hour charts).
• The key medium-term resistance to watch remains at 11050/11220 zone which is defined by the descending trendline linking the lower highs since 13 April 2015, the exit potential of the  “Double Bottom” bullish breakout, the 61.8% Fibonacci retracement of the steep down move from 13 April 2015 high to 24 August 2015 low and from a lower degree, the 1.618 Fibonacci projection from 29 September 2015 low to 12 October 205 high @4pm projected from 14 October 2015 low @12pm (see daily & 4 hour charts).
• Based on the Elliot Wave Principal, the Index is likely to have seen the low of the corrective (bearish) wave (2) at the 10490/10380 support zone.

Key levels (1 to 3weeks)

Intermediate support: 10490

Pivot (key support): 10380

Resistance: 10840, 11050 & 11220

Next support: 10000/9890

Conclusion

Based on the above mentioned technical elements, the Index is likely to have seen the low (or close to it) of the pull-back/consolidation that has started from the 09 November 2015 high. As long as the 10380 weekly pivotal support holds, the Index is now poised for another round of upside movement to retest 10840, 11050 before targeting the 11220 resistance.

However, failure to hold above the 10380 pivotal support may invalidate the expected recovery scenario to see a further decline towards the next support at 10000/9890.

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