dax daily outlook thurs 21 apr 2016 pull back first towards 1037010280 support before another potent

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has shaped a shallow pull-back (printed a low of 10277) before a bullish breakout occur above the 10400 short-term pivotal resistance.

Yesterday’s price action of the Index has invalidated our preferred bearish setback scenario, please click here for a recap on our previous daily short-term outlook/strategy.

Key elements

• Yesterday’s price action has indicated that the short-term upside momentum of price action remains intact and it does not pay to fight with it at this juncture. The daily RSI oscillator still has some room left before reaching its extreme overbought level.
• The significant medium-term resistance now stands at the 10630/860 zone which is defined by the upper boundary of the bearish descending channel in place since the 52-week high of 12408 printed on 12 April 2015 and a Fibonacci cluster (see daily chart).
• The near-term supports rests at 10370 follow by 10280 which is defined by yesterday’s minor congestion zone.
• The hourly (short-term) Stochastic oscillator has exited from the overbought region and still has room for further downside before reaching the extreme oversold level. These observations suggest that the Index may see a further pull-back in price action.

Key levels (1 to 3 days)

Intermediate support: 10370

Pivot (key support): 10280

Resistance: 10630 & 10860

Next support: 10080

Conclusion

Short-term uptrend remains intact for the Index. Given yesterday’s run up in price action, the Index may see a pull-back first towards the intermediate support at 10370 with a maximum limit set at the 10280 daily short-term pivotal support for a potential final push up towards the 10630 resistance and even 10860.

On the flipside, failure to hold above the 10280 short-term pivotal support is likely to put the bulls on hold for a deeper slide towards the next support at 10080 (the ascending trendline from 08 April 2016 low @3am),

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