dax weekly outlook for 19 jan to 23 jan pull back before potential upside movement towards potential

 

What happened last week

The German 30 Index (proxy for the DAX) has managed to stage a bullish breakout from its “Symmetrical Triangle” pattern and met its upside target at 10100 as expected. In addition, it has managed to print a historical high of 10310 on 16 January 2015. Please click on this link for more details on our last weekly outlook.

Key elements

• The upper boundary of the long-term ascending channel in place since September 2011 stands at 10900/11000 (see weekly chart).
• The long-term RSI oscillator remains bullish since the break of its former trendline resistance and 50% level (see weekly chart).
• The 200-day Moving Average is acting as a support now at 9600 (see daily chart).
• The lower boundary of the shorter-term ascending channel (in light-blue) is 9600 (see 4 hour chart).
•  The 10040/9940 support also coincides closely with the 38.2% Fibonacci retracement from 06 January 2015 low to 16 January 2015 high (see 4 hour chart).
• The shorter-term Stochastic oscillator has exited from the overbought region which suggests a risk of a pull-back (see 4 hour chart).
• The upper boundary of the long-term ascending channel (in orange) in place since September 2011 is at 10900/11000 which coincides with a Fibonacci projection cluster (see weekly chart).

Key levels (1 to 3 weeks)

Intermediate support: 10100

Pivot (key support): 10400/9940

Resistance: 10580 & 10900/11000

Next support: 9600/9400

Conclusion

The multi-month bullish trend in place since 16 October 2014 remains intact. However based on shorter-term technical elements, do expect a potential pull-back to occur first towards the intermediate support at 10100 with a maximum limit set at the weekly pivotal support of 10400/9940 before the bullish trend resumes to target 10580 before 10900/11000 next.

However, failure to hold above 10400/9940 may negate the bullish tone to see a decline towards the next support at 9600/9400.

Disclaimer

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