dax potential recovery above 10380 support 1829962016

Daily Outlook, Tues 13 September 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has plummeted in line with the horrendous decline seen in the major benchmark U.S. stock indices on last Friday, 09 September.

After the latest ECB’s monetary policy meeting held on 08 September 2016, European central bank officials have indicated that they are reluctant to add more monetary easing measures which triggered the ongoing decline seen in the Germany 30 Index from its 08 September 2016 minor swing high of 10780

Interestingly, the current decline of 4% has led the Index to challenge and held above the 10380 medium-term pivotal support (click here to recap the details as per highlighted in our prior weekly technical outlook).

Key elements

• The Index has tested and held above the lower boundary of the medium-term ascending channel in place since 24 June 2016 low (Brexit) which also confluences with the 10380 medium-term pivotal support (see daily chart).
• In conjunction, the daily (medium-term) RSI oscillator has managed to reintegrate back above its pull-back support (in dotted green) after an initial breach below it. This observation suggests that upside momentum of price action remains intact.
• The intermediate resistance stands at the 10600/670 zone which is defined by the former minor swing low area of 08/09 September 2016 and the 61.8%/76.4% of the recent decline seen from 08 September 2016 (ECB) to yesterday low of 10310.

Key levels (1 to 3 days)

Intermediate support: 10460

Pivot (key support): 10380 (medium-term)

Resistance: 10600/670

Next support: 10100

Conclusion

Maintain bullish stance. As long as the 10380 medium-term pivotal support holds, the Index is likely to see a potential recovery to target the 10600/670 resistance in the first step.

On the other hand, failure to hold above the 10380 pivotal support is likely to invalidate the preferred recovery scenario for a further choppy decline towards the next support at 10100.

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