Asian Open Wall Street Shakes Off Early Losses

(Click to enlarge chart)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has staged the expected decline below the 10400 short-term pivotal resistance and met the upper limit of the short-term downside target at 10230 in the U.S. session.

Please click on this link to recap our previous daily short-term outlook/strategy.

Key elements

• Price action has staged the bearish breakout from the short-term “Ascending Wedge” lower limit now turns pull-back resistance at 10400.
• The hourly (short-term) RSI oscillator remains bearish below the pull-back resistance and the 50% neutrality level. These observations suggest that short-term downside momentum of price action remains intact.
• The next near term support rests at 10082 which is defined by the pull-back support of the former minor swing high areas of 12/17 May 2016 and the 50% Fibonacci retracement of the recent rally from 24 May 2016 low of 9771 and yesterday high of 10373.

Key levels (1 to 3 days)

Intermediate resistance: 10320

Pivot (key resistance): 10400

Support: 10082

Next resistance: 10530/650

Conclusion

Maintain short-term bearish bias. As long as the 10400 daily short-term pivotal resistance is not surpassed, the Index is likely to see a further potential decline to target the next support at 10082.

However, a break above the 10400 short-term pivotal resistance is likely to invalidate the bearish setback scenario to see a direct push up towards the 10530/650 resistance.

Disclaimer

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. City Index recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.