dax potential final push up above 10630 support 1826822016

Daily Outlook, Tuesday 16 August 2016

(Click to enlarge charts)

What happened earlier/yesterday

After a high of 10806 seen yesterday, 15 August, the Germany 30 Index (proxy for the DAX futures) has started to shape a pull-back of 1.6% to print a current intraday low of 10630.

Today’s (16 August) early European session decline has appeared to be triggered by a spill over of renewed risk aversion seen during the Asian session as the USD/JPY has breached below a short-term support of 100.60 without any fundamental catalyst. Do note that the USD/JPY is now hovering right above its key long-term support zone of 100.00/99.00 (click here for more details as per highlighted in a separate technical daily outlook /strategy report on the Nikkei 225).

Key elements

• The current decline from yesterday high of 10806 has managed to be held by a key short-term support of 10630 which is defined by a short-term ascending trendline (depicted in light green) in place since the minor swing low area of 03 August 2016, the 23.6% Fibonacci retracement of the recent rally from 03 August 2016 low to yesterday’s high and the minor swing low area of 10 August 2016 (see 1 hour chart).
• The 4 hour Stochastic oscillator has already dipped into an extreme oversold level coupled with a bullish divergence signal seen in the shorter-term 1 hour Stochastic oscillator in its oversold region. These observations suggest that the downside momentum of the current decline has started to abate and a potential short-term bullish reversal is likely at this juncture.
• The significant resistance to watch will be at 10870/990 which is defined by the medium-term swing high areas of 07/30 December 2015 and a Fibonacci cluster follow by 11050 (the upper boundary of the medium-term bullish ascending channel in place since 06 July 2016 low & a potential 5^th wave target, 5/ of (1) based on the Elliot Wave Principal). Click here for more details as per highlighted in our latest weekly technical outlook/strategy published yesterday.

Key levels (1 to 3 days)

Pivot (key support): 10630

Resistances: 10870/990 & 11050

Next support: 10380

Conclusion

Potential final push up towards significant medium-term resistance.  As long as the 10630 daily short-term pivotal support holds, the Index is likely to shape a potential push up to target the 10870/990 resistance with a maximum limit set at 11050.

On the other hand, a break below the 10630 short-term pivotal support may invalidate the preferred bullish push up scenario for a deeper slide towards the next support at 10380 (lower boundary of the medium-term ascending channel and the pull-back support of the former significant descending rang top bullish breakout that occurred last week).

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