dax weekly outlook 21 sep to 25 sep expect a potential retest on the key 96009320 support 1363072015

 

(Click to enlarge charts)

What happened last week

The German 30 Index (proxy for the DAX) has tried again to set up an assault on the 10320 upside trigger level but failed to make any breakthrough on the third attempt on 18 September 2015.  Interestingly, it tumbled severely by 4% within two days as  the U.S. central bank, Fed maintained its overnight Fed Funds policy interest rate at 0.25% since December 2008.

Please click on this link for a review on our previous weekly outlook.

Key elements

• The Index is above the lower limit of the long-term key support zone of 10013/9600 defined by the 34-month Moving Average (in red), ascending trendline (in orange) joining the lows since 11 September 2011 and the 38.2% Fibonacci retracement of the up move from 11 September 2011 low to 05 April 2015 high (see monthly & weekly charts).
• The “Black Monday”, 24 August 2015 low stands at 9320.
• The weekly (long-term) Stochastic oscillator has continued to inch upwards from its oversold region and still has room for further upside potential before reaching its extreme overbought level (see weekly chart).
• The Index has been rejected by the pull-back resistance of the medium-term descending channel bearish breakout (in purple) at 10320 for the third time (see daily & 4 hour charts).
• The daily (intermediate-term) RSI oscillator remains bearish below its trendline resistance and the 50% neutrality level (see daily chart).
• The short-term resistances (highlighted by the pink trendlines) coincides at the 10080/10118 zone (see 4 hour chart).
• The 4 hour (short-term) Sochastic oscillator has dipped into its oversold region which highlights the risk of rebound towards the 10080/10118 resistance zone (see 4 hour chart).
• Based on the Elliot Wave Principal, the Index is undergoing in a (a),(b),(c) “Irregular Flat” correction configuration that has started from 28 August 2015 high @8am. From the 09 September 2015 high of 10523, the Index appears to be in the midst of undergoing the final bearish (c) leg of the “Flat” correction that consists of a set of minimum five waves from a lesser degree.  Current price action has traced out three waves from the 09 September 2015 high of 10523, thus we have left potentially with two more waves (the countertrend 4^th wave and the downleg 5^th wave) (see 4 hour charts).

Key levels (1 to weeks)

Intermediate resistance: 10080/10118

Pivot (key resistance): 10320

Support: 9600/9320

Next resistance: 10650

Conclusion

Technical elements are suggesting a retest on the significant support zone of 9600/9320 seen on 24 August 2015, “Black Monday”. However, do expect a short-term rebound first towards the intermediate resistance zone of 10080/10118 before the potential final down leg materialised to retest the 9600/9320 support zone.  

On the flipside, failure to hold below the 10320 weekly pivotal resistance may negate the bearish tone to see a push up towards the next resistance at 10650.

Source:  Charts are from eSignal & City Index Advantage Trader

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