dax daily outlook friday 06 nov bullish tone remains intact above 10800 support 1729872015

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX) has managed to stage a rebound from the range support of the “Expanding Triangle” configuration as expected and almost hit the upside target at 11000 (printed a high of 10964).

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

Key elements

• The intermediate resistance remains at 11000 which is the range top of the “Expanding Triangle” configuration follow by the 11220 key medium-term resistance as per defined by exit potential of the “Double Bottom” bullish breakout and the 61.8% Fibonacci retracement of the steep down move from 13 April 2015 high to 29 September 2015 low.
• The hourly (short-term) RSI oscillator that gauges price momentum remains positive above its support/50% neutrality level and it still has ample room for further upside before reaching its extreme overbought level. In addition, it has also flashed a prior bullish divergence signal at the oversold region.
• As per mentioned in our yesterday’s outlook report, the Elliot Wave count with respect to the current observation seen in the hourly RSI oscillator suggest that the Index may have completed the corrective wave 4 (low of the “Expanding Triangle” seen yesterday at 10781). The Index is in the midst of undergoing its bullish wave 5 of 5/(1).

Key levels (1 to 3 days)

Pivot (key support): 10800

Resistance: 11000 & 11220

Support: 10480 (weekly pivot)

Conclusion

Technical elements are still positive. We have tightened the daily (short-term) pivotal support to 10800 for a further upside movement to retest the short-term range top at 11000 before targeting the significant medium-term resistance at 11220.

On the other hand, a break below the 10800 pivotal support may jeopardise the bullish tone to see a deeper slide to test the key pull-back support of the ‘Double Bottom” bullish breakout at 10480.

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