dax daily outlook thurs 03 mar 2016 potential final push up above 9680 before pull backconsolidation

(Click to enlarge charts)

What happened yesterday/earlier

The Germany 30 Index (proxy for the DAX futures) has shaped the expected pull-back towards the predefined short-term intermediate support at 9680 (printed a low of 9695) before it managed to reverse partially its earlier losses as expected.

Please click on this link for recap on our previous outlook/strategy.

Key elements

• The Index continues to evolve within a bullish ascending channel in place since the start of the countertrend rally at 11 February 2016 low. However, it is now approaching the upper boundary (resistance) of the ascending channel now at 9930/10060.
• The upper boundary (resistance) of the ascending channel at 9930/10060 is a significant zone at least in the short-term as it confluences with multiple technical elements. Firstly, it is the rejection zone on 26/28 January 2016 that stalled the Index before the steep decline of  12.4% within two weeks to hit a low 8696 on 11 February 2016 as well as now the pull-back resistance of the former long-term trendline support from 11 September 2011 low. Thirdly, now the 1.382/1.618 Fibonacci projection of the rally from 24 February 2016 low of  9123 to 26 February 2016 high of 9577 projected from 29 February 2016 low of 9331.
• Based on the Elliot Wave Principal, the Index is now undergoing a bullish wave sequence of a minor degree (multi-days) which consists of a standard set of 5 waves labelled as (1,2,3,5) that started from 24 February 2016 low @11pm. Current price action is now undergoing the wave 3 upleg with a potential target set at 9930/10060 (1.382/1.618 Fibonacci projection as per above mentioned).
• The significant short-term support now rests at 9680 which is defined by yesterday’s swing low area and the 23.6% Fibonacci retracement of the recent rally from 24 February 2016 low @11 pm to 02 March 2016 high of 9850 @2pm.

Key levels (1 to 3 days)

Pivot (key support): 9680

Resistances: 9930/10060

Next supports: 9540 & 9400/330

Conclusion

We maintain the short-term bullish bias for the Index and tightened the short-term pivotal support to 9680 for a potential final push up towards 9930/10060 resistance zone before a pull-back/consolidation sets in for wave 4.

On the other hand, failure to hold above the 9680 short-term pivotal support is likely to put the bulls on hold for a further slide to test the former swing high area of 23 February 2016 at 9540. Only a clear break below 9540 may see a deeper decline towards the lower boundary of the ascending channel at 9400/330.

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