dax weekly outlook for 06 july to 10 july 1060010500 is the key support to watch for a potential rec

(Click to enlarge charts)

What happened last week

The German 30 Index (proxy for the DAX) has managed to stage a retreat from the 11230 intermediate resistance as expected.

*Note: The Index has gapped down in today’s (06 July 2015) early morning session and it is trading close to the key support at 10600 (expected target).

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

Key elements

• The significant support at 10600 is the pull-back support of the former long-term ascending channel bullish breakout that occurred in 18 January 2015 (in dotted blue), 23.6% Fibonacci retracement of the long-term up move from 11 September 2011 low to 13 April 2015 high and 1.00 Fibonacci projection from 13 April 2015 high to 22 May 2015 high (see weekly, daily & charts).
• Based on the current price action and Elliot Wave Principle, the Index is coming close to a key inflection level at 10600 where the bearish (corrective) wave (4) is likely to end and a potential bullish reversal to occur to kick start the bullish wave (5) (see daily & 4 hour charts).
• The long-term RSI momentum oscillator is coming close to its significant supports which suggest limited downside potential (see weekly chart).
•  The significant medium term resistance will be 11340 which is the trendline resistance joining the highs since 13 April 2015 high @4am and close to the 38.2% Fibonacci retracement of the recent down move from 13 April 2015 high @4am to the current low of 06 July 2015 @4am (see 4 hour chart).
• The short-term Stochastic oscillator is coming close to its extreme oversold level (see 4 hour chart).

Key levels (1 to 3 weeks)

Pivot (key support): 11600/11500

Resistance: 11340 & 11620

Next support: 10013

Conclusion

Current technical elements suggest that the Index is now coming close to a key inflection level at 10600 where a potential medium term (multi-week) recovery should materialise. As long as the 11600/11500 weekly pivotal support holds, the Index is likely to see an upside movement to target the 11340 resistance in the first instance with a possible maximum limit set at 11620.

However, failure to hold above 11600/11500 is likely to trigger another round of waterfall slide towards the long-term key support at 10013 (see weekly chart).

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