dax weekly outlook for 22 june to 26 june mixed elements 11620 and 11135 are the key levels to watch

(Click to enlarge charts)

What happened last week

The German 30 Index (proxy for the DAX) has met the lower limit of the expected downside target at 10815 (printed a low of 10799 on 16 June 2015) before staging a sharp reversal in the later part of the week.

Please click on this link to review our previous weekly outlook.

Key elements

• Price action of the Index has managed to stage a sharp reversal at the 10815 support which also confluences with the 50% Fibonacci retracement of the up move from 16 December 2014 low to 13 April 2015 high (see daily chart).
• The intermediate term RSI oscillator has flashed a bullish divergence signal but it still remains below its resistance (see daily chart).
• Despite the current strong price action, the Index still remains below its significant resistance at 11620 which confluences with the pull-back resistance of the former trendline support joining the lows since 16 October 2014 (in brown), pull-back resistance of the former “Expanding Wedge” bearish breakout (in dotted blue) and 50% Fibonacci retracement of the recent down move from 13 April 2015 high to 16 June 2015 (see daily & 4 hour charts).
• The next significant support will be at 10600 which is the pull-back support of the former long-term ascending channel bullish breakout that occurred in 18 January 2015, 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 & 4 hour charts).

Key levels (1 to 3 weeks)

Resistance: 11620, 12050/12150 & 12400

Support: 11135 & 10600

Conclusion

Technical elements are mixed at the moment. Only a clear break above 11620 is likely to trigger the start of a medium term upside movement to target 12050/12150 before 12400 in the first instance.

On the other hand, the Index needs to break below 11135 for the bears to resurface for a potential decline to target the 10600 significant support.

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