dax potential minor pull back before push up above 10380330 support 1832882016

Daily Outlook, Tues 04 Oct 2016

(Click to enlarge charts)

What happened earlier/yesterday

Yesterday, the German cash stock market is closed for a national public holiday while the rest of major stock benchmark stock indices remain above their respective medium-term pivotal support as risk aversion continues to ease.

The Germany 30 Index (proxy for the DAX futures) has managed to stage a strong rebound of 3.6% on last Friday, 30 September right at the 10230 excess medium-term pivotal support after it printed an intraday low of 10184.  The Index has moved within our expectation as we are reluctant to validate a bearish case on the medium-term (1 to 3 weeks) despite the Deutsche Bank debacle as reported in the media. Reasons are being explained in details both on the Index and cross assets analyses as per highlighted in our latest weekly technical outlook/strategy report yesterday (click here to recap).

What will be in store for today?

Key German/Eurozone economic data releases/events for today

• Eurozone  Producer Price Index for Aug @0900 GMT (0.1% m/m & -2.2% y/y consensus)

Key elements

• After a strong intraday up move see on last Friday, 30 September, the Index now faces the risk a minor pull-back towards the intermediate support of 10415 as defined by a Fibonacci cluster (1.00 time projection from the minor swing high of 10560 printed on 03 October + 0.382% retracement from last Friday bear trap low of 10184.
• The key short-term support will be at 10380/330 which is defined by the 50%/61.8% Fibonacci retracement of the sharp up move from last Friday low of 10184.
• The hourly (short-term) Stochastic oscillator still has some room to manoeuvre to the downside before reaching an extreme oversold level. This observations reinforces the potential minor pull-back in price action scenario.
• The key short-term resistance stands at 10650/10700 which is the upper boundary of the mini “Expanding Wedge” configuration in place since 15 August 2016 medium-term swing high.

Key levels (1 to 3 days)

Intermediate support: 10415

Pivot (key support): 10380/330

Resistance: 10650/700

Next support: 10230 (medium-term pivot)

Conclusion

The Index may see an initial minor pull-back towards 10415 with a maximum limit set at the 10380/330 short-term pivotal support before a potential push up to test the upper boundary of the “Expanding Wedge” at 10650/700 in the first step.

On the other  hand, failure to hold above the 10380/330 short-term pivotal support is likely to invalidate the preferred push up scenario for another round of choppy decline to retest the 10380 medium-term pivotal support.

Charts are from City Index Advantage TraderPro

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