dax weekly outlook for 10 aug to 14 aug potential rounding bottom chart pattern in progress 10071520

(Click to enlarge charts)

What happened earlier

The German 30 Index (proxy for the DAX) has continued to push higher as expected above the 11200 weekly pivotal support.

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

Key elements

• Since the low of 10652 printed on 08 July 2015, the Index has evolved within an ascending channel (in brown) with lower (support) and upper (resistance) boundaries at 11430 and 12400 respectively (see daily & 4 hour charts).
• The next support stands at 11280 which also corresponds with the 61.8% Fibonacci retracement of the recent up move from the 28 July 2015 low@12am to 06 August 2015 high @4pm (see 4 hour chart).
• The intermediate term RSI oscillator remains bullish above its support and the 50% neutrality level (see daily chart).
• The short-term Stochastic oscillator still shows some room for further potential downside before reaching its extreme oversold level. This observation suggests a further potential pull-back for the Index (see 4 hour chart).
• The significant resistance stands at 11890/11980 follow by 12190 which is the 1.00 Fibonacci projection from 08 July 2015 low @12 pm to 27 July 2015 low @8pm (this represent the minimum bullish wave 3/ target based on the Elliot Wave Principle) (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 11430

Pivot (key support): 11280

Resistance: 11890/11980, 12190 & 12400

Next support: 11030 & 10650/10600

Conclusion

Current technical elements suggest the Index is in a midst of forming an impending bullish “rounding bottom” chart pattern with its neckline resistance at 11890/11980.

Any potential pull-back is likely to be held above the 11430 intermediate support with a maximum limit set at the key 11280 weekly pivotal support for a further potential rally to test 11890/11980 before targeting the next resistance at 12190.

On the contrary, failure to hold above the 11280 pivotal support may negate the bullish tone to see a retest on the 28 July 2015 swing low at 11030. Only a crack below 11030 is likely to trigger a deeper slide towards the long-term key support at 10650/10600.

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