dax further potential push up in progress 1820912016

Daily Outlook, Tues 12 July 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has indeed recovered as expected from last Wed, 06 July low of 9302 as per highlighted in our previous daily short-term technical outlook/strategy reports last week. For this coming week, we are maintaining our bullish bias on the Index with the intermediate “stubborn” resistance at 9780 to watch in the first instance. Please click on this link to recap our latest weekly (medium-term) technical outlook/strategies for major stock indices published yesterday.

Today’s key Germany/Eurozone economic data releases as follow:

• Germany Consumer Price Index for Jun @0600 GMT (0.1% m/m consensus, 0.3% y/y consensus).
• Germany Whole Price Index for Jun @0600GMT (0.3% m/m consensus)

 Key elements

• Current price action has staged a bullish breakout above the 9780  intermediate resistance (minor swing high areas of 01 July/04 July 2016) now turns pull-back support at 9770.
• The 4 hour RSI oscillator has inched upwards without any bearish divergence signal sighted and still has some room left before reaching an extreme overbought level. These observations suggest that upside momentum of price action remains intact.
• On the shorter-term, the Index is evolving within a bullish ascending channel in place since 24 June 2016 low (Brexit) with the current price action that is above the median line of the channel, now acting as support at around 9710 (which is also closed to the pull-back support of the former minor swing high areas of 01 July/04 July 2016 at 9770) (see 1 hour chart).
• The upper boundary of the aforementioned ascending channel now stands at 10180 which confluences with a Fibonacci cluster and the upper boundary of the “Expanding Wedge” (see 1 & 4 hour charts).
• Based on the Elliot Wave Principal and fractal analysis, the Index is likely undergoing an intermediate degree bullish impulsive wave 3/ from last Wednesday low, 06 July low of 9302 with its potential end target at 10180 (derived from Fibonacci clustering techniques) which also confluences with the aforementioned graphical elements.
• The short-term key support now rests at 9600 which is slightly below 9770/710 as defined by the former minor swing low area of 30 June 2016 that has been tested twice in the past and also the 38.2% Fibonacci retracement of the most recent rally from 06 July 2016 low to yesterday’s high.

Key levels (1 to 3 days)

Intermediate support: 9770/710

Pivot (key support): 9600

Resistance: 10180

Next support: 9370

Conclusion

Maintain bullish bias. As long as the 9600 daily short-term pivotal support holds, the Index is likely to see a further potential rally towards the 10180 resistance (ascending channel & “expanding wedge” tops).

On the other hand, failure to hold above the 9600 short-term pivotal support may negate the preferred bullish tone to see a further slide towards the ascending channel’s support at 9370 which is also the minor swing low area of 08 July 2016.

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