dax daily outlook thurs 19 nov 11100 potential acceleration level 1772682015

(Click to enlarge charts)

What happened yesterday

The Germany 30 Index (proxy for the DAX) has rallied as expected and met the lower limit of our expected short-term upside target at 11050.

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

Key elements

• Current price action is now testing pull-back resistance from 17 August 2015 and the descending trendline linking the lower highs since 13 April 2015 at 11100 (see daily chart).
• Even though the Index is right below the 11100 resistance but no clear exhaustion sign from yesterday’s daily candlestick pattern (Bullish Marubozu) and the daily (medium-term) RSI oscillator is still above its supports and yet to reach its extreme overbought level (see daily chart).
• In the shorter-term, the Index has evolved within a bullish ascending channel in place since this Monday, 16 November 2015 low with lower (support) and upper (resistance) limits now at 10970 and 11220 respectively.
• The upper limit of the aforementioned ascending channel at 11220 confluences with  a lower degree 76.4 Fibonacci projection of the up  move from 16 November 2015 low @3pm to 18 November 2015 high @12am projected from 18 November 2015 low @5pm. In addition, the 11220 resistance is our weekly expected upside target (click here for more details as per highlighted in our latest weekly outlook/strategy).
• The hourly (short-term) Stochastic oscillator is inching downwards towards its oversold region which suggests the Index may see a dip in price action at this juncture as yesterday’s upside momentum has appeared “overstretched”.

Key levels (1 to 3 days)

Pivot (key support): 10970

Resistance: 11100 & 11220

Next support: 10830

Conclusion

The Index may see a minor pull-back close to the 10970 daily (short-term) pivotal support before a potential up move to test 11100 and above it may see an acceleration towards the next resistance at 11220.

On the other hand, failure to hold above the 10970 pivotal support is likely to see a deeper pull-back towards the next support at 10830.

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