dax potential residual pull back above 1026010180 before new rise 1823432016

Daily Outlook, Thurs 28 July 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Germany 30 Index (proxy for the DAX futures) has shaped the expected minor pull-back below the 10345 short-term intermediate resistance ahead of the latest U.S. Fed monetary policy announcement. It printed a low of 10280 in the overnight U.S. session.

Please click on this link for a recap on our previous daily short-term technical outlook/strategy.

Key Eurozone/Germany economic data releases for today:

• Germany Unemployment Rate (Jul) @0755 GMT (6.1% consensus)
• Germany Consumer Price Index (Jul – preliminary) @1200 GMT (0.3% y/y & 0.2% m/m consensus)

Key elements

• Despite yesterday pull-back in price action, the short-term bullish trend from 19 July 2016 low remains intact. The short-term intermediate support to watch will be at 10260 which is defined by an ascending trendline (depicted in dark blue) in place since 19 July 2016 low and the 23.6% Fibonacci retracement of the recent rally from 19 July 2016 low to yesterday’s high of 10354.
• The key short-term pivotal support remains at 10180 which is the pull-back support of the former “Expanding Wedge” range top bullish breakout and the 38.2% Fibonacci retracement of the recent rally from 19 July 2016 low to yesterday’s high of 10354.
• The next resistance to watch for the Index will be at the key zone of 10530/650. It is defined by a confluence of significant elements (the long-term descending range top in place since 12 April 2016 that has capped all prior advances, the former ascending trendline support from September 2011 low now turns pull-back resistance & a Fibonacci cluster).
• The hourly (short-term) Stochastic oscillator is now coming close to its extreme overbought level which suggests that the Index may shape another leg of pull-back towards the 10260/10180 support zone.

Key levels (1 to 3 days)

Intermediate support: 10260

Pivot (key support): 10180

Resistances: 10345 & 10530/650 (medium-term)

Next support: 9980 (medium-term pivot)

Conclusion

Maintain bullish bias. The Index may see a “residual” pull-back towards the 10260 intermediate support with a maximum limit set at the 10180 daily short-term pivotal support before it resumes its upside movement to retest 10345 before targeting the key resistance zone of 10530/650.

However, a break below the 10180 short-term pivotal support may negate the preferred bullish tone as the Index reintegrates back into the “Expanding Wedge” configuration (failure bullish breakout) for another round of choppy decline towards this week medium-term pivotal support of 9980.

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